Frames 2014

The stage is set
FICCI-KPMG
Indian Media and Entertainment
Industry Report 2014
kpmg.com/in
FICCI-KPMG
Indian Media and Entertainment
2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
The stage is set
contents
Table of
01
09
Introduction
Television
Mixed signals
95
133
New Media
Radio
Getting to critical mass
195
At a new
frequency
199
Out of home
Advertising
Displaying resilience
Paused for growth
239
Outward bound
Next frontier for Indian

M&E sector players
259
Tax and
regulatory
Navigating through
tax complexities
63
Print
Films
Regional rupees
Exhibiting strength
153
177
Music
Animation,VFX &
post-production
Waiting for the digital

promise
215
Creating magic
235
Live Events
Deal volume and

value in 2013
Taking centre stage
Searching for
opportunities
271
Skills in the M&E
sector
Redefining roles
276
Analytics
Profiting from insight
49
Foreword
Transforming lives...
2014 is a landmark year for India. An election year that is likely to set the
direction of the country going forward and determine whether we resume
our journey towards our aspirations. As a nation still on a journey to fulfill its
promise and meet the aspirations of its youth, India should aggressively make
an effort to transform itself.
Aspirations and ambition are extremely important in a nations journey
towards development.The desire to do better, run faster and go higher
is a critical ingredient to propel us, as a nation, forward.The media and
entertainment industry in India is a big part of sparking this ambition,
widening horizons, and helping transform lives.
The more we, as industry players, can enable the growth of this industry, the
more people across the country can be made aware of issues, be educated
and entertained, see how other parts of the country and world are and connect
with others.
Today, Indias M&E industry reaches millions of people. 161 millionTV
households, 94,067 newspapers (12,511 dailies), close to 2000 multiplexes,
214 million internet users out of which 130 million are mobile internet users
all these are platforms that could drive change and be transformational
catalysts.
2013 was a tumultuous year for the industry. In the midst of an economic
slowdown, the industry faced several challenges, both business and
regulatory. However, 2013 was a year in which the foundation of the industry
was strengthened to position for growth as the economy improves.
In television, industry structures began the process of realignment, with
MSOs and LCOs in a delicate dance to evolve their relationship.Several
regulations including the ad cap and notifications around aggregators
were announced, that will likely change how the industry does business.
Digitisation has yet to deliver its promise with set top boxes seeded in Phase
I and II cities but with packaging and ARPU increases yet to kick in.The future
though, looks promising, with efforts being made to introduce channel
packaging, implement subscriber management systems and raise the ARPU
initiatives that are likely to benefit all the stakeholders in the television
ecosystem.
Films had slower growth in 2013, than in 2012 and returned to the mean as
far as growth rates go. Multiplex expansion, ticket prices growth and the
expansion of digital screens are all likely to slow down in the near term
challenging the industry to find new avenues to maintain momentum.
However, India is a heavily under-screened country and the macro story for
the film industry remains strong.
The print sector had a comfortable year especially regional print, with
English print struggling on the ad revenue front. Advertising remained steady
Radio too, had a good year with better long term prospects.The government
disappointed again on Phase III licensing which is now likely to come only
after the elections.The industry continues to require regulatory interventions
as it is in dire need of reform. FM radio nevertheless, is now becoming an
integral part of many media plans.
The big hope for the future of the M&E industry continues to be digital.
With a fast growing internet user base of over 200 million internet users,
the potential of the industry to enhance engagement with customers and
generate revenue from digital media is indeed vast. 2013 saw a few tipping
points for digital; the telecom companies began to focus on data as a revenue
driver, as contribution from voice slowed, and the advertising agencies began
a furious competition to acquire digital and social media boutiques. All of
these point to a bright future for this sector.
This year we also cover several new interesting aspects of the M&E sector.
Over the years, live events has been emerging as a robust category. Last year
saw Indian audiences flocking to shows by international DJs, musicians and
comedians. IP driven shows also show record viewership and attendance.
Live events have become a major source of revenue for artistes and a credible
avenue for sponsors. Several companies in this space are heading towards
critical mass and are poised to take the sector forward.
We have covered advertising and the evolution of the agency space.These
stakeholders in the M&E business are influential. We hope that the insights
into the value chain of this part of the media sector will be beneficial for
several users of this report.
It is time for Indian companies in the M&E sector to begin looking at
opportunities outside India. While several companies have gone overseas in
search of the diaspora dollar, there are opportunities that Indian companies
could begin to explore in mainstream markets overseas. For example,
Africa and the Middle East are some of the fastest growing M&E markets. As
companies in other sectors have shown, the experience of working in India is
an asset when entering these markets Indian M&E companies could do well
to explore the MEA region.
This is the 15th year of FICCI Frames a milestone for a forum that is the
M&E industrys premier gathering to debate issues, discuss ideas, study
benchmarks and most importantly initiate action!
As we take stock of business issues at this years Frames, we should also
focus on the role that Media plays in influencing, driving and being an agent
of positive change.
UDAY SHANKAR
CHAIRMAN
FICCI Media and
Entertainment Committee
RAMESH SIPPY
CO-CHAIRMAN
FICCI Media and
Entertainment Committee
KARAN JOHAR
CHAIRMAN
FICCI Frames
JEHIL THAKKAR
HEAD
Media and Entertainment

KPMG in India
in the smaller towns and cities and elections in the Hindi heartland provided
a boost. In 2014, with general elections, the news business is likely to have a
good year.
01
Introduction
The Media and Entertainment (M&E) industry in India

transforming lives
The Indian Media and Entertainment (M&E) Industry, one
of the most vibrant and exciting industries in the world,
has had a tremendous impact on the lives and the Indian
economy. As the M&E industry widens its reach, it plays
a critical role in creating awareness on issues affecting,
channelling the energy of and building aspirations among
Indias millions. As it entertains and informs the country,
the M&E industry has been a catalyst for the growth
of large parts of the Indian economy. Take for example,
a villager illiterate and previously unaware of what
life has to offer, who begins to see a better life through
entertainment programs on TV and aspires for a better
life for him and his family. This drives demand for various
products and services. These aspirations have been key
to self motivated transformation taking deep root in India
Transformation not just from handouts and government
schemes, but transformation stemming from ambition
and aspiration. The media plays a significant role in our
lives today and is all pervasive with touch points ranging
from television to newspapers to films to radio to outdoor
properties. With the addition of new media such as social
networking services, animation and VFX, online gaming
and applications running on mobile devices, a new
dimension has been added to the world of media that was
dominated by traditional media. In addition to their implicit
impact, all media platforms provide a great opportunity to
carry explicit messages to create social impact. Further,

interactive and social platforms give people a voice.
Examples include

Films: Short films on disadvantages of tobacco

consumption/smoking before each film screening in a
theatre.1
Television: TV shows on social issues to raise
Radio: Content highlighting social initiatives aired on
awareness, such as Crime Patrol Dastak (Sony

Entertainment Television), Savdhaan India India fights
back (Life OK) and Satyamev Jayate (Star Plus).1
radio such as Mirchi for Muzaffarnagar (Radio Mirchi),

Munni Vardaan Hui (Red FM), and Green Ganesha (Big
FM).2
Print: Friends of Hindustan (Print campaign by Hindi

daily Hindustan in Patna), Good is in our DNA (print
campaign by DNA).3
Social Media: UNICEF Indias campaign of Take
Poo to the Loo on Facebook, Twitter and Youtube to

spread the message of the harmful effects of open
defecation;4 connects consumers with each other and
provides a platform for opinion generation.
Industry size and projections

Overall industry
size (INR billion)
2008
2009
2010
2011
2012
2013
Growth in
2013 over
2012
2014p
2015p
2016p
2017p
2018p
TV
241.0
257.0
297.0
329.0
370.1
417.2
12.7%
478.9
567.4
672.4
771.9
885.0
16.2%
Print
172.0
175.2
192.9
208.8
224.1
243.1
8.5%
264.0
287.0
313.0
343.0
374.0
9.0%
Films
104.4
89.3
83.3
92.9
112.4
125.3
11.5%
138.0
158.3
181.3
200.0
219.8
11.9%
Radio
8.4
8.3
10.0
11.5
12.7
14.6
15.0%
16.6
19.0
23.0
27.8
33.6
18.1%
Music
7.4
7.8
8.6
9.0
10.6
9.6
-9.9%
10.1
11.2
12.9
14.9
17.6
12.9%
OOH
16.1
13.7
16.5
17.8
18.2
19.3
5.9%
21.2
23.1
25.2
27.5
30.0
9.2%
Animation and VFX
17.5
20.1
23.7
31.0
35.3
39.7
12.5%
45.0
51.7
60.0
70.2
82.9
15.9%
Gaming
7.0
8.0
10.0
13.0
15.3
19.2
25.5%
23.5
28.0
32.3
36.1
40.6
16.2%
Digital Advertising
6.0
8.0
10.0
15.4
21.7
30.1
38.7%
41.2
55.1
69.7
88.1
102.2
27.7%
Total
580
587
652
728
821
918
11.8%
1039
1201
1390
1580
1786
14.2%
Source: KPMG in India analysis
01. KPMG in India analysis

02. www.radioandmusic.com ; www.medianewsline.com
03. http://www.exchange4media.com/54010_print-takes-social-good-route-to-engage-readers.html
04. http://lighthouseinsights.in/unicef-india-take-poo-to-the-loo-social-media-campaign.html
CAGR
(2013-18)
The stage is set: FICCI-KPMG Indian Media and Entertainment Industry Report 2014
In calendar year 2013, the Indian Media & Entertainment

(M&E) industry registered a growth of 11.8 per cent over
2012 and touched INR 918 billon. The overall growth
rate remained muted, with a slow GDP growth and a
weak rupee. Lower GDP meant lower demand from the
consumer and this impacted advertising. At the same
time, the industry began to see some benefits from the
digitisation of media products and services, and growth
in regional media. Gaming and digital advertising were
the two prominent industry sub-sectors which recorded
a strong growth in 2013 compared to the previous year,
albeit on a smaller base. For projections till 2018, digital
advertising is expected to have the highest CAGR of 27.7
per cent while all other sub-sectors are expected to grow
at a CAGR in the range of 9 to 18 per cent. Overall, the
industry is expected to register a CAGR of 14.2 percent to
touch INR 1785.8 billion by 2018.
The Indian M&E sector showed some resilience and

began to grapple seriously with some structural issues
it has long talked about but not engaged with. These
include TV and Print industry measurement, advertising
volumes, inventory and rates, actions to see digitisation
through and reap its benefits, working out the MSO-LCO
relationship, copyright laws and operational efficiency.
Many of these remain alive and will take a few years
to sort through. Others, like phase III of radio are still
pending regulatory action.
Highlights
Television: Digitisation of cable saw the television
industry still on the path of progress, with the mandatory
Digital Access System (DAS) rollout almost complete
in Phase II cities. The impact was felt to the extent
that carriage fees saw a reduction of 15-20 per cent
overall 5, however the anticipated increase in ARPUs
and subscription revenues for broadcasters and MSOs
(Multi System Operators) is expected to be realised only
over the next 2-3 years as MSOs begin the process of
becoming B2C organisations from B2B organisations. The
introduction of packaging is key to raising revenue. Other
key highlights in 2013 were the inclusion of LC1 (less than
class I) markets in TV ratings, the 12 minute advertising
cap ruling and the shift from TRP to TVT ratings.
Print: The print sector continued to buck the global
slowdown trend. The sector grew at a CAGR of 8.5 per

cent this year to touch INR 243 billion. Regional markets
performed exceedingly well on the back of steady
advertiser spends, the state election impact and new
launches. However, with the validity of IRS data called
into question by the industry majors, the sector in the
short term suffers from the lack of a robust measurement
system, critical for decisions on media planning and
allocations.
Films: The film industry recorded a double digit growth,
albeit slower than in 2012, with multiple movies scoring

big on box office collections. Approximately 90-95 per
cent movie screens are now digitised in the country,
with a shift in focus to tier II and III cities.5 Going forward,
multiplex growth is expected to slow down, in line with
the overall delays and future expectations for retail sector
and commercial real estate development, impacting box
office growth in the short term.
Music: Streaming and download services continued
to see growth, with the growth in mobiles, in particular

smartphones, contributing significantly to increased
consumption of music on-the-go but monetization of
this reach is still a challenge. However, with the continued
decline in physical sales, compounded by the significant
fall in ringback tone revenues (following the backlash of
TRAI guidelines issues in 2012), the sector saw an overall
fall in size by 10 per cent in 2013. Going forward, digital
revenues are expected to drive growth in the sector,
backed by increased collaborations across devices and
platforms, and gradual uptake in subscription services.
Further, the vibrant live events sector is expected to
continue its role as a catalyst for driving growth in artists
fan-base, and public performance royalties.
Radio: The radio industry outperformed all other

traditional media segments by clocking a growth of
15 per cent. Currently, clients are being forced to reevaluate their media mix as their advertising budgets are
constantly under pressure. There has been a tendency
to shift focus from nationwide pure brand-building to
more tactical, local, focused promotional targeting.
This has played in radios favour as it enables local reach
to advertisers increasingly looking to target specific
audiences and at affordable pricing. Although phase III of
radio frequencies auctioning remained elusive in 2013,
05. Industry discussions conducted by KPMG in India
implementation of the same in 2014, industry players

could establish their presence in over 290 tier II and tier III
cities.
Animation / VFX: 2013 was an important year for the

Animation and VFX industry. The most expensive Indian
animated movie Mahabharat costing around INR 500
million received global kudos. The production work was
done in India and the industry woke up to the promise of
VFX. VFX is now being used in most films, whether to add
characters, landscape, background or to simply correct
the skin tone of an actor. 2013 also saw the introduction of
policies by a few state governments to boost the sector.
VFX also began to get used in TV. The impetus of visual
effects was not restricted to films, but also extended to
big budget serials and television commercials. However,
the underlying struggle in the industry came to the
forefront with the fall of big names like Rhythm and
Hues and Digital Domain and retrenchment by some big
players.
New Media: The total internet user base in India grew
to approximately 214 million by end of the year with

almost 130 million going online using mobile devices.6
Mobile internet users dominated the total internet user
base capturing an overall share of 61 percent. With the
dramatic growth in mobile usage, content providers
and advertisers are seeking opportunities to get their
messages across on this preferred medium of the
masses. Digital media advertising grew 38 percent-faster
than any other advertising category. Mobile, social and
video emerged as star categories in advertising owing to
the proliferation of smartphones, 3G and off-deck mobile
apps.
This years report also highlights opportunities that could
come from tapping international markets with a special
feature on opportunities in the Middle East and Africa
region. We also cover the live events market as well as the
advertising market separately, along with an overview of
the advertising services market in India.
Round up of the key trends and themes for

growth
Over the last few months, our team met with over 150
senior stakeholders across TV, films, print, gaming and
animation/ VFX, radio, music, OOH, advertising and
new media sectors. In this report, we have provided
a consolidated point of view on the key trends which
shaped these sectors over calendar year 2013 and what
could be the game changers going forward.
Digitisation Taking the next step

The phased progress in digitisation has been the
stepping stone for the industrys growth and success,
thereby bringing about a paradigm shift in key indicators,
particularly within the domains of TV and film sectors.
The Ministry of Information and Broadcasting (MIB)
introduced several initiatives with a view to harness the
power of technology and create a framework to drive
growth in the existing broadcasting landscape in India.
With phases one (top four cities in the country) and two
(the next 38 cities) nearly complete, the industry is now
committed to complete phase three (all remaining urban
areas) of digitisation of TV signals transmission by the
end of this year. Successful completion of the digitisation
process will result in the complete closure of analogue
transmission and could act as an enabler to add value
and to increase profits at each level in the value chain. It
is estimated to bring about a further drop in the carriage
fees, and drive growth in ARPUs, thereby increasing
profitability and allowing content producers to focus on
better content.
In the film sector as well, digitisation has enabled better
monetisation for the industry, as a single film can be
distributed across thousands of screens and locations
in a short period of time. We are moving quickly to an all
digital world where most films are shot on digital format;
distributed across various geographies in digital format;
marketed through various social media platforms; and film
tickets are sold through online booking platforms and also
made available on websites providing Video-on-Demand
(VOD) services. While monetisation of content on digital
platforms remains a concern in the short term, the
industry is buoyant about its long term potential.
With about 95 per cent of Indias cinema screens already
digitised, a nationwide digital release like Dhoom 3 is
increasingly going to be the norm. In addition, the growth
of multiplexes helped drive box office collections. In India,
approximately 95 per cent of commercially viable screens
have been digitised till date.7
Continued growth in Regional Media

Regional media in India has demonstrated strong growth
over last few years, and continues to have a positive
outlook. Given the size and diversity of the Indian market,
media owners and advertisers are increasingly adding a
regional element to their strategies. As a result, regional
markets have grown in size and importance. The key
drivers of growth in the regional media space continue to
be a better cultural fit for regional content, focus on socio07. Industry discussions conducted by KPMG in India
08. http://www.boxofficecapsule.com/collection/4th-Weekend-Box-Office-Collection-Of-Marathi-FilmTIMEPASS-2117
09. http://www.punjabicinema.org/highest-grossing-punjabi-movies
political issues related to particular regions and stronger

engagement with customers in contrast to national Hindi
programming
Apart from films in South Indian languages, films in
Marathi, Punjabi, Bengali, Gujarati as well, had a good year
where films like Duniyadari (Marathi, INR 280 million)8
Jatt and Juliet 2 (Punjabi, INR 200 million+)9 were
declared commercial blockbusters. The Marathi industry,
in particular, grew almost by 50 per cent over the last year
and continues to grow stronger.10 Timepass, a Marathi
film released on 3rd January 2014 has already overtaken
Duniyadari and has collected over INR 300 million on box
office making it the biggest grossing Marathi film ever.8
In terms of print media, the rise in literacy rates,
significant population growth, resilience of the agrarian
economy, the rise in incomes in smaller towns and the
entry of big players in regional markets is likely to drive
future expansion of regional circulation and readership
across India. Examples of national players launching
regional print editions include The Hindu launching a
Tamil edition, Times of India launching a Gujarati edition
NavGujarat Samay and Dainik Bhaskars entry in Patna.
In Indias commercial radio industry, phase III of offering
frequencies to private players is expected to take place
in CY 2014. According to MIB data, 839 frequencies are
likely to be auctioned in 294 tier II and tier III cities across
India in phase III. The rollout of phase III would provide a
boost to broadcasting regional media content. Advertisers
would also have additional avenues to take their brands
to consumers through phase III of radio. In addition to
more licenses, the industry is hopeful that regulations
pertaining to the networking of content and multiple
station ownership in one market are also revised.
India goes more mobile

Globally, the number of mobile phone users is expected
to reach 4.55 billion and mobile phone internet user base
is estimated to reach 2.23 billion by the end of 2014.
Smartphone adoption is also expected to continue its
rapid growth and its user base is likely to reach 1.75 billion
by the end of 2014.11 The growth is primarily being led
by the developing regions of Asia Pacific, notably India
and China. India, by the end of 2013, is estimated to
have gained a mobile phone user base of more than 900
million.12 While the worldwide smartphone shipments
would have surpassed 1 billion units in 2013, India
became the third largest smartphone market in the world
with shipments of 44 million units.13
Increasing competition and upgradation and sharing of
network infrastructure by telecom operators are just
two of the factors expected to propel growth in data.
As providers introduce numerous package options for
mobile data at further reduced rates, use of data is likely
to increase, and is expected to be the driver of revenue
and profit for telecom companies in contrast to the voice
service driven growth of previous years. Bundled offers
from handset makers and telecom service providers (e.g.
Reliance Communications and Apple iPhone 5S) are also
expected to gain momentum.
10.
11.
12.
13.
Industry Discussions conducted by KPMG in India

eMarketer newsletter, 16 Jan 2014
TRAI performance indicator report, Sep 2013
IDC press release, 26 Nov 2013
This is leading to a rapid increase in internet based

consumption of music, radio, TV programming, video
gaming, video-on-demand services and even full-length
films. As a result, numerous players have started to
create specialised content for the small screen as well
as to facilitate the viewing of existing content on mobile
screens. Recently, Tata Sky launched its application for
iPhone, iPad and Android powered devices to watch TV
programmes on-the-go.14
The need for youth to stay socially connected

through media
Social has become one of the most effective and
influential mediums today, with an increase of over
37 per cent in the user base in 2013. Though India is
lagging behind the global average of social media user
penetration, it is expected to grow rapidly thanks to social
media applications on smartphones.
Facebook has emerged as the clear leader in terms of
the number of unique visitors (close to 60 million) and
minutes spent per visitor (217 minutes) in 2013.15 Other
popular social media platforms in India include Twitter,
LinkedIn, Pinterest, and Tumblr.
To engage with its consumers, largely in the age group
of 18 to 30 (Youth), Facebook has acquired companies
such as Instagram and Lightbox, with the latest being
WhatsApp for a whopping USD 19 billion.16
Necessity of regulatory support

To achieve its vast potential, the Indian M&E industry
needs a well thought through, consistent and long term
policy from the Government. In the past few years, Indian
M&E players have amended their business models,
business strategies and content strategies according to
consumption habits of users, ever changing competitive
landscape and rules and regulations of the Ministry of
Information and Broadcasting (MIB), TRAI and other
related bodies. In many cases, the regulatory agencies
have had a positive impact on the industry the biggest
example being the digitisation of cable TV in the country
which was mandated by the government to be rolled out
in a phased manner. The media industry agrees that it
couldnt have achieved this nationwide change without
the support of the government.
However, in other cases, inaction and delays have
significantly impacted the growth of the industry an
example is the delay is phase III of radio. The auction
of Phase-III of radio licenses is expected to benefit
the radio industry with an additional 839 frequencies
across 294 tier II and tier III cities. With this expansion,
FM radio is likely to be heard by around 90 per cent of
the Indian population, making it truly a common mans
medium. Phase-III offers exciting opportunities for
companies to expand both into new cities and as well
as within existing cities with a 2nd and even 3rd frequency.
Additionally, networking of radio channels is expected to
be used very effectively by operators for providing local
as well as networked content to cut both capital and
operational costs for enabling more profitable operations.
14.
15.
16.
17.
Tata Sky Pressroom, May 2013

Comscore: India Digital Future in Focus, 2013
http://www.cnbc.com/id/101429929
Industry discussions conducted by KPMG in India Source: Tata Sky Pressroom, May 2013
In 2013, the 12 minute cap on advertisements per hour

of advertising has had a big commercial impact on all
TV channels. In the short term, channels may lose
revenue and will have to provision for more content;
but in the long term, there will be a stiff competition to
get advertisement spots, primarily in the prime time
hours, which are likely to drive up advertisement rates,
besides improving the overall TV viewing experience
for audiences. The industry would ideally prefer
implementation once the subscription revenues start
accruing for the broadcasters, especially niche channels
which are currently completely ad dependent.
In addition to the above examples, there are several
issues that need action from regulators that are covered
in more detail in each of the industry sections of this
report.
Growing contribution of live events in M&E

industry
In this years report, we have also covered live events as
a sector. As India builds larger venues to accommodate
world class events and the appetite for live events grows,
this sector will increasingly grow in size and impact. Still
extremely fragmented, the sector has shown signs of
maturity and scale has been achieved by a few players in
the industry. Coming on the back of the slowing economy
from 2008 to 2012, 2013 was sluggish in terms of live
events and recorded a growth of less than 10 per cent
over the previous year. Rupee depreciation, general
economic stagnation, rising artist and talent costs, and a
lack of high-quality infrastructure were the key reasons.
Inspite of being a fairly unorganised and fragmented
sub-sector within the M&E market, live events is set
to experience fresh initiatives in brand and community
building through experimental creations works, and niche
event management.
Based on KPMG in India analysis, 2014 is expected be
positive in terms of live events especially intellectual
property events (IP-Events) and outbound Meetings,
Incentives, Conferences and Exhibitions (MICE).
Companies operating in this space are positively investing
in creating the necessary infrastructure and are spending
significant amounts in Below-the-Line (BTL) advertising.
In 2014, the top 20 event firms are expected to see
growth in profits from 13 per cent to 20 per cent.17
Events such as Filmfare awards, Sunburn, Jaipur Litfest,
Lakme Fashion Week, IIFA, NH7 are now established
properties in the live events sector.
Beyond borders
The global M&E market has witnessed signs of steady
growth over the past 3-5 years and is expected to cross
USD 2 trillion in 2018 at a CAGR of 6 per cent from 2013 to
2018. Growth of mature markets such as North America
and Europe declined due to recession in 2008-09;
however Asia-Pacific, Latin America and Middle East and
Africa (MEA) showed better growth rates and this trend is
likely to continue in the future. MEA is expected to grow
at around a CAGR of 12 per cent compared to a CAGR of
1 to 2 per cent in mature markets such as North America,
and Europe.
Conclusion
Increasing digitisation across sub-sectors of M&E
industry, rate increases in TV, channel packaging by
MSOs, innovative strategies to monetise digital content,
rapid growth of new media powered by increasing
smartphone penetration, and campaign spending during
the general elections are likely to be the key levers of
growth for the Indian M&E industry in 2014.
A well thought out, consistent and long term outlook on
regulation is also the key to create an M&E industry that
is world class in scale and plays its part in transforming
India.
8
02
Television
Mixed signals
Introduction
In 2013, the television industry continued its journey
down the game changing path that it had embarked
on in 2012. The television industry experienced an
unpredictable operating environment in 2013 with
digitisation of cable achieving various levels of success in
different regions, inclusion of LC1 (less than class I; towns
with under 0.1million population) markets in TV ratings,
the 12 minute advertising cap ruling and the shift from TV
rating points (TVRs) to TV viewership per thousand (TVTs).
While digitisation of cable progressed in the right
direction in 2013, better addressability and increase
in subscription revenues for Multi System Operators
(MSOs) and broadcasters is expected to happen over
the next three years. Television advertising continued to
face headwinds on account of the soft macro-economic
environment, leading to companies cutting advertisement
spends. Against this backdrop, leading networks and
mainstream genres performed better than smaller players
and niche genres. Changes in the television viewership
measurement system are expected to further affect the
way advertising spend is allocated among different genres
and channels.
2013 has been a watershed year for the

broadcasting industry. Digitization, gross versus
net billing for advertisers, implementation of
cap on advertising minutes, and evolution in
TV ratings from GRPs to TVTs have caused
fundamental shifts in the industry.
- Sanjay Gupta
Chief Operating Officer,
Star India Private Limited
2013 was also the year of the regulator, whether it

was capping duration of commercial time on television
channels or driving ahead digitisation. The Telecom
Regulatory Authority of India (TRAI) put pressure on
everyone in the TV ecosystem to ensure progress of
digitisation. This was apparent at every stage, that is,
rolling out of digital cable set top boxes (STBs) in Phase
I and II cities, pursuing MSOs to complete collection
of customer application forms (CAF), introducing gross
billing and rolling out channel packages.
2013 saw a lot of action by the regulator on

matters such as implementation of the 12 minute
ad cap and DAS. Benefits of these measures will
be realised over a period of time.
- N. P. Singh
Chief Executive Officer,
Multi Screen Media Private Limited
The television industry in India is estimated at INR417

billion in 2013, and is expected to grow at a CAGR of 16
per cent over 2013-18, to reach INR885 billion in 2018.
Aided by digitisation and the consequent increase
in Average Revenue Per User (ARPU), the share of
subscription revenue to the total industry revenue is
expected to increase from 67 per cent in 2013 to 71 per
cent in 2018.
There is a big opportunity in the television media

segment for all stakeholders. The consumer
is willing to pay for quality content which is
distributed to them in a well packaged manner.
From a macro perspective, everything seems
to be falling in place expectation of strong
economic growth, increasing penetration of
television households, digitisation bringing
in transparency, potential for ARPUs to grow
substantially, and growing consumerism driving
advertising revenue growth. In the next 5 years,
India would perhaps be one of the fastest
growing media markets in the world.
- Atul Das
Chief Corporate Development Officer,
Zee Entertainment Enterprises Limited
10
TV Industry size
1,000
885
900
772
800
253
672
700
221
INR Billion
567
600
195
479
500
417
400
300
257
241
100
82
88
158
169
172
370
329
297
200
103
116
194
214
152
136
125
281
245
327
395
477
551
632
2008
2009
2010
2011
2012
Advertisement revenue
Source: KPMG in India analysis, Industry discussions conducted by KPMG in India
Note: Figures are rounded to nearest integers and may not add up exactly to column totals
Paid C&S penetration of TV households

expected to increase to 90 per cent by 2018
The number of TV households in India increased to 161
million in 2013, implying a TV penetration of 60 per cent.
The number of Cable & Satellite (C&S) subscribers
increased by 9 million in 2013, to reach 139 million.
Excluding DD Direct, the number of paid C&S subscribers
is estimated to be 130 million. This C&S subscriber base
is expected to grow to 181 million by 2018, representing
95 per cent of TV households. Of this, paid C&S base is
expected to be 171 million in 2013, representing 90 per
cent of TV households.
TV households and C&S penetration of TV

households
250
96%
95%
191
200
161
94%
92%
90%
150
88%
86%
100
86%
84%
84%
82%
50
80%
78%
2012
TV households
2013
2018P
C&S penetration of TV households
Percentage
154
Million
11
2013
2014P
Subscription revenue
2015P
2016P
2017P
2018P
Snapshot of the TV industry value chain
Content
production
Broadcasting
Content production industry continues to be fragmented, given the low barriers to entry and highly creative nature of
the industry.
In general, production costs continued to increase, not only linked to inflation but also to improvement in production
quality. Increased competition has also led to higher investments in production quality.
Digitisation is expected to create significant opportunities for growth for content providers, including improvement
in content quality, localised content and niche channels.
Increasingly, content producers are recognising the need for owning intellectual property (IP) rights for content so
as to be able to monetise it better. IP rights also provide a barrier to entry in an extremely fragmented industry with
several small players.
2013 continued to be a challenging year for broadcasters, with a lower-than-expected advertising revenue growth
driven by the weak operating environment and TRAIs 12 minute ad cap regulations.
Among the various genres, Hindi and Regional General Entertainment Channels (GECs) performed the best in 2013
with ad spend flowing to mainstream channels considered to be safer bets in an environment of slow advertising
growth.
The long-term outlook for TV advertising remains positive and advertising revenues are expected to grow at a 13 per
cent CAGR from 2013-18.
Subscription revenues increased in 2013, partly due to higher subscription revenues from Phase I & II cities and
partly due to better negotiation through consolidated channel aggregators.
While some benefits of digitisation were seen in 2013, real benefits in terms of growth in subscription revenues and
decline in carriage fees are expected to be seen over 2014 and 2015.
In digitised areas, carriage costs appear to have declined. At the same time, TAMs increased coverage of LC1
markets has resulted in some of the carriage savings being redirected to increase reach in LC1 markets.
Growth is expected to be driven by a sharp increase in net subscription revenues, driven by better ARPU shares and
lower carriage fees.
Industry discussions suggest that the rollout of STBs in Phase I and Phase II cities has been completed to a large
extent, except in Chennai, Coimbatore and Hyderabad. Deployment of STBs in Phase II cities was smoother than that
in Phase I cities on account of learnings from Phase I experience.
While customer verification is mostly complete in Phase I cities, the process is ongoing in Phase II cities, with
varying degrees of success across different cities.
MSOs are now focusing on updating their systems and moving subscribers to gross billing from net billing before
different ARPU packages are deployed. MSOs are likely to consolidate in Phase I and II before moving their focus to
Phases III & IV cities.
While analogue subscriber churn to DTH was lower than expected, DTH has shown strong performance in ARPU
growth, increasing by 12-15 per cent in 2013 driven largely by price hikes and increase in subscription of high
definition (HD) channels, premium channels and value added services.
Once MSOs start introducing tiering in Phase 1 and 2 markets another round of package and feature set wars is
expected to occur between DTH and digital cable.
It is important to continue the momentum and ensure that digitisation of cable in Phases III & IV gets completed,
else there may be a risk that even Phase I and II cities may regress to a mlange of analogue and digital cable.
Distribution
Distribution
2013 will probably be best remembered by the industry
as the year in which mandatory Digital Access System
(DAS) gained traction with roll out in Phase II cities. As per
our report last year, most stakeholders had indicated a
delay of 6-12 months for complete rollout of STBs across
the 38 Phase II cities. The experience has largely been in
line with industry expectations. While there have been
implementation challenges in some Phase II cities such as

Hyderabad and Coimbatore, DAS roll-out is estimated to
be almost complete in Phase II cities. At an overall level,
all industry participants agree that digitisation has been a
step in the right direction, and that they remain committed
to the digitisation effort.
12
13
2013 was a landmark year where all the

stakeholders aligned towards capitalising on the
digitisation opportunity and making the benefits
of digitisation available to all the players across
the value chain. This has been aided to a large
extent by the regulatory push.
- M.G Azhar
Den Networks Limited
Even as MSOs work to verify and consolidate billing for

their subscriber base in Phase I and II cities, the deadline
for Phases III & IV is close. The Ministry of Information &
Broadcasting (MIB) recently announced that the deadlines
for Phases III & IV of DAS implementation would be
merged to 31 December 2014.1 Phases III and IV are
expected to require significantly higher investments by
MSOs and also present challenges in terms of managing
logistics.
The Phase I and Phase II experience

Rollout of set top boxes
Most industry participants are in agreement that the

digitisation deadline is not the end of a journey but the
start of one. Though there has not been significant
impact of digitisation on customer ARPUs or subscription
revenue in 2013, most industry participants are of the
opinion that its financial benefits will happen over the
next 2-3 years from 2014 through 2016. The industry also
believes that it is critical for the regulatory pressure to
continue for digitisation to be completed.
Despite the implementation and policy bottlenecks,

digitisation of cable television distribution made
significant progress in Phase I metros as well as in Phase
II cities. Collection of CAF and customer verification is
almost complete in Phase I cities (apart from Chennai)
and MSOs are moving towards starting gross billing.
With an estimated 20 million C&S households in Phase II
cities, 17 million subscribers were required to be digitised
during Phase II.2 The extent of STB roll-out achieved
across different Phase II cities has been different.
However, industry discussions indicate that on an overall
basis, 90 per cent of C&S households (including DTH
households) are estimated to have been digitised across
Phase II cities.
The biggest learning from Digitisation has been that Digitisation date is Beginning of the Transformation as against
earlier conception of End of Transformation. It is a milestone marking the beginning and there is a long journey
ahead in terms of increasing addressability, improving consumer choice and achieving better revenue share among
the different players in the value chain.
- Rohit Jain
Deputy Chief Executive Officer,
Videocon DTH
Status of digitisation
Phase
Parliamentary approval
for analogue shutdown
Digital cable
STBs rolled out
Digitisation
including DTH
CAF forms
Gross billing
95%
Started in Delhi in
January 2014; Mumbai
& Kolkata expected to
start in Feb-March 2014
Started
Expected to start from

April 2014
Not started yet
Not started yet
Not started yet
Phase 1*
Jun-12
~8 mn
98%
Phase 2**
Mar-13
~14 mn
90%
To be completed by
Feb 2014
Phase 3
Dec-14
Phase 4
Dec-14
~3 mn
40-50%
Not started yet
80-90%

* Except Chennai; ** Except Hyderabad and Coimbatore
01. MIB: Now on to DAS phase III & IV, Indiantelevision.com, 22 January 2014
Rollout of
Channel packages
Deadline for CAF in Phase II cities

2013 was year of shaping agenda. On the
positive side, it provided a proof of concept that
digitisation can happen. On the negative side,
digitisation progressed strictly by the book by
first rolling out STBs followed by collection
of forms. There was no real change in the
ecosystem - revenue share for stakeholders and
choices to subscribers did not improve.
- Harit Nagpal
Managing Director & Chief Executive Officer,
Tata Sky Limited
Industry discussions indicate that political interests

in Tamil Nadu continue to delay implementation of
digitisation in Chennai (Phase I) and Coimbatore (Phase
II). TRAI is yet to award a DAS license to the state
government run Arasu Cable which is the clear leader
in the cable TV distribution market in Tamil Nadu. In
December 2013, TRAI issued a press release deeming
transmission of analogue signals in Chennai as illegal and
calling for immediate implementation of digitisation but
Arasu Cable got a stay order from the Madras High Court
restraining TRAI from discontinuing analogue signals in
Chennai. However, some smaller MSOs in Chennai have
started rolling STBs and current digitisation reportedly
stands at 35-40 per cent3 but it is difficult to verify this
independently. In Hyderabad, there has been uncertainty
regarding the area in which digitisation is applicable
whether the old Hyderabad Municipal Corporation (HMC)
area or the Greater Hyderabad Municipal Corporation
area. However, in the old HMC area, digitisation is
reportedly complete.
Collection of CAF and Customer verification

Our discussions with industry participants suggest that
while households in Phase I and Phase II have been
seeded with STBs as indicated above, addressability is
playing catch-up. In April 2013, TRAI had directed MSOs to
ensure that their subscriber management system (SMS)
is operationalised before providing cable services through
DAS, and the signals of TV channels are transmitted to
only those subscribers whose details such as name,
address, choice of channel and bouquets etc. are entered
into the SMS. MSOs were also directed to disconnect
TV signals of the subscribers whose details were not
entered into the SMS system and to furnish compliance
report latest by 7 May 2013. However, this deadline was
extended several times. One of the issues was that
several different types of STBs has been rolled out by the
MSOs and moving these subscribers to a common SMS
is proving to be a problem.
In Phase I cities, MSOs have reportedly completed the
process of collection of CAF, complete in all respects
including choice of channels and entry of those details
in the SMS. In Phase II cities, this process is in various
degrees of completion and TRAI had extended the date
for completion of CAF collection for Phase II cities.
% completion
of CAF and
entry into SMS
Date
Rajkot, Surat, Vadodara,

Faridabad, Mysore,
Aurangabad, Nasik, PimpriChinchwad, Pune, Sholapur,
Amritsar, Ludhiana, Jaipur,
Jodhpur, Agra, Allahabad,
Ghaziabad, Kanpur, Lucknow,
Meerut, Varanasi, Chandigarh
and Howrah
~90%
27-Jan- 2014
Patna, Ahmadabad, Ranchi,

Bangalore, Kalyan-Dombivili,
Nagpur, Navi Mumbai and
Thane
~80%
31-Jan- 2014
Phase II cities
Bhopal, Indore and Jabalpur

Vishakhapatnam and Srinagar
7-Feb- 2014
28-Feb- 2014
Coimbatore, Hyderabad
No date
Source: TRAI Press release 17 January 2014, KPMG in India analysis
Access to subscribers and the LCO-MSO

relationship
Post collection of CAF and entry into the SMS, MSOs are
now in the process of moving subscribers from net billing
to gross billing gross billing implies that if a subscriber
has chosen a package of INR 180, then he/she will have
to pay entertainment tax (varies from state to state) and
12.36 per cent service tax on the package rate of INR 180.
As such, gross billing is the first step to inform consumers
of the changed ecosystem in a digitised environment.
TRAI had directed MSOs and Local Cable Operators
(LCOs) to start providing bills including taxes to
subscribers in Phase I cities, excluding Chennai, from
December 2013 (for the November bill). As per the
direction, the bills should be itemised, giving details of the
name and price of channels in the package and mention
the service and entertainment taxes levied. MSOs also
had to ensure that a proper receipt is given by it or its
LCO for every payment made by the subscriber and
submit a compliance report for Phase I cities to TRAI by 31
December 2013.
However, differences over billing responsibility are
continuing to result in a tussle between the MSOs and
the LCOs in the Phase I cities. Having invested a huge
amount of capital in the rollout of STBs, the MSOs
wanted to have control over billing subscribers, while the
LCOs were concerned about eventually losing control of
the subscribers to MSOs on transfer of billing rights to
the MSOs. There were other issues as well including the
revenue share formula and the responsibility for paying
entertainment and service taxes. This has led to the
LCOs refusing to issue bills and collect money from the
subscribers in several areas.
14
15
LCOs play an important role in the success

of digitisation and growth of the industry;
therefore, engaging them at every level is
critical. Empowering LCOs with the best-inclass technologies and systems will result in
improving customer relationship management
and will also help in expediting the digitisation
process in phases III and IV markets. MSOs
should make LCOs an integral part of their longterm growth strategy to bolster their loyalty.
- V D Wadhwa
SITI Cable Network Limited
Leveraging the LCOs is very important as there

is implicit trust between him and the consumer.
MSOs plan to use the same network for billing
and collection and though the power of billing
will shift to the MSO, it remains to be seen how
this affects ground activity.
- Sudip Ghosh
Director,
Manthan Broadband Services Private Limited
The deadlock has been resolved for the time being, when
most of the larger MSOs agreed in January 2014, to help
the LCOs to raise bills through their SMS, while allowing
the LCOs to bill the subscribers in the LCOs name, with
the inclusion of the MSOs name and logo on the bill.
The MSO will also issue a separate invoice to the LCOs
indicating its share of the amount collected from the
subscribers. In effect, the LCOs will provide bills in their
name to the subscribers, collect money towards the bills
from the end subscribers, deduct their share and pass on
the remaining amount to the MSOs. The entertainment
tax liability will lie with the LCOs, but the service tax
issue is still being resolved. As per industry discussions,
once the modalities of gross billing and revenue share
are worked out for Phase I cities, the implementation of
the same in Phase II cities will be far smoother. TRAI has
recommended a revenue share of 55:45 (MSO: LCO)
for the basic free-to-air (FTA) tier and 65:35 (MSO: LCO)
for a combination of FTA and pay channels. However, in
practice, MSOs have agreed to offer a higher revenue
share to their LCOs for the time being.4, 5 MSOs expect
that after rolling out tiered channel packages leading
to increase in subscriber ARPU, they would be able to
negotiate a more equitable revenue share arrangement
with LCOs as that would lead to higher absolute amount
being received by the LCOs. As per industry participants,
over a period of time, the share of LCOs is expected to
reduce to 35 per cent, without a decrease in the absolute
amount that the LCOs receive.
04. Cable Wars, Outlook Business, 22 June 2013
05. MSOs-LMOs close to breaking the deadlock over gross billing in Mumbai, Televisionpost.com,
6 January 2014
A key concern is that if addressability and billing

issues in digital cable are not sorted out soon,
two years down the line, the same ARPU levels,
subscription revenue share and carriage fee
will continue, with the only change being the
technology through which signals are delivered
to customers.
- Anuj Gandhi
Group Chief Executive Officer,
Indiacast Media Distribution Private Limited
In order to protect their business models and ensure

their survival, LCOs have also been evaluating their
options across the country. While LCOs have access to
end subscribers, what they lack is negotiating power
with broadcasters and access to funding. This has led
to an increasing trend towards LCO consolidation, if
not through the M&A route then through formation
of associations and unions, especially in Gujarat,
Maharashtra, Kerala, and Karnataka. The LCOs want to be
called Last Mile Operators (LMOs) and some LCOs are
also moving towards becoming ICOs (Independent Cable
Operators) where they have interconnect agreements
directly with broadcasters/channel aggregators instead of
being linked with any MSOs.
Digital cable retains larger share of analogue

subscribers
Similar to the experience in Phase I cities, MSOs have
demonstrated strong performance in Phase II cities as
well, and the analogue subscriber churn to DTH has been
minimal. Industry discussions suggest that one of the
factors that helped MSOs retain a large share of their
analogue subscriber base was that despite giving the
customer a higher number of channels and a better quality
of signal than earlier, cable operators have not increased
prices yet. Overall, the DTH industry had approximately
3 million additions net of churn in 2013 taking its net
subscriber base to 37 million from 34 million in 2012.6
We have to look beyond the numbers of STB

rollout and at the economic model. It is true that
cable took a higher share of STBs rolled out in
Phase I & II cities. However, instead of getting
into a land grab for new customer additions, the
DTH industry was more focused on protecting
its economic model. DTH industry is more
focused on customer service, customer-oriented
packaging, HD channels, and quality of service
rather than just gaining subscribers.
- R.C. Venkateish
Dish TV Limited
DTH and Digital Cable ARPU
No. of C&S Subscribers

200
180
160
139
140
130
Million
119
120
100
80
60
40
157
148
105
8
5
28
5
31
6
68
74
34
19
37
44
25
40
9
56
181
173
165
72
70
68
20
2012
Analog cable
81
87
91
2013 2014P 2015P 2016P 2017P 2018P

Digital cable
2013
2014P
2015P
2016P
2017P
2018P
Digital Cable
175
196
225
248
273
301
DTH
200
220
242
266
292
322
75
55
31
2010 2011
ARPU (INR per

month)
60
69
10
DTH
Other Digital

Note: (1) DTH figures for 2011 and 2012 have been re-stated taking into consideration the change in
the way industry calculates net subscribers
(2) DTH figures are net of churn
(3) Figures are rounded to the nearest integer and may not add up exactly to column totals
DTH operators focusing on ARPU improvement;

ARPU improvement in digital cable still an issue
While DTH operators had challenges on subscriber
additions, ARPU for DTH subscribers has seen an
increase of around 12-157 per cent in 2013 driven
largely by price hikes and increase in subscription of HD
channels, premium channels and value added services.
Growing HD adoption has been one of the prime reasons
for increase in DTH ARPUs and there are now ~37 million
HD subscribers, accounting for ~8 per cent of all DTH
subscribers.
DTH ARPUs have seen an increase of on

account of price hike in base packages,
reduction in free period from 2-3 months to
zero in most cases, increasing HD penetration,
increase in pay per view revenues and traction
in subscription of premium channels.
- R. Mahesh Kumar
Sun Direct Private Limited
Digital cable on the other hand, has not seen any

significant ARPU increases. For digital cable, deployment
of different channel packages will be the key driver to
raise ARPUs. As per industry participants, in Phase I
cities where rollout of different channel packages has
started, digital cable ARPUs at the subscribers end has
seen an increase of 15-207 per cent, while there has
not been any material increase in Phase II cities so far.
On an overall basis, digital cable ARPUs are estimated
to have increased by 57 per cent. However, discussions
with MSOs suggest that while ARPUs have increased
at the subscriber end, there has not been any significant
increase in the ARPU share received by the MSOs.
Benefit of digitisation to Broadcasters

In 2013, large networks appear to have witnessed 15-207
per cent growth in their subscription revenue, which
was lower than expectations. Subscription-led revenue
share deals between broadcasters and MSOs are still
the exception in the industry. Given that the MSOs are
still in the process of verifying subscribers on the ground
and establishing SMS, broadcaster-MSO agreements
continue to be based on fixed fee arrangements for the
most part.
Industry participants across the value chain agree that
digitisation has reduced the carriage fee payout, even
though it may have not been as per expectations. The
Phase I and II markets have witnessed a 20-257 per cent
drop in carriage, partly driven by digitisation and partly
due to negotiating power of aggregators. Phase I and
II markets account for 75 per cent of the carriage fee
payment, resulting in a 15-207 per cent decline in carriage
fees overall. However, news channels have not really
been the beneficiaries of this decline in carriage fees
due to fragmentation and lack of any real differentiation.
Also, in the near term, there is a risk that decline in
carriage fees in digitised regions may be offset by an
increase in carriage fee paid for LC1 markets since TAM
has extended its reach to include the LC1 markets and
broadcasters may want to ensure visibility in these
markets.
The supply-demand situation to carry channels will
improve significantly post digitisation, and therefore on an
overall basis, the payout towards carriage fee is expected
to decline further over the next three years by 25-307 per
cent. However, there is also a realisation that carriage
fees will not disappear completely in the medium term.
16
17
There has been some correction in carriage

costs. Expect further reduction in carriage costs
going forward. However, do not expect a linear
co-relation between reduction in carriage fees
and progress in digitisation the reduction will
be dependent on MSOs improving their business
model.
- Mihir Modi
Chief Finance and Strategy Officer,
Expectations from Phases III & IV
The ongoing changes in regulatory and

technology spheres is changing the game
fundamentally. While phased digitisation is
increasing bandwidth and therefore more
channels, better placements and sub revenue
is still tilted in favour of bouquets. In the medium
term, the bigger players will have an unfair
advantage. This will hopefully change with
package implementation at household level, but
that looks like a little while away. Overall, this
is a time to build brands as large territories are
virtually getting the full sweep of C&S offerings
for the first time as Phases III & IV roll out. There
is a lot of building to do in this industry and that
means that the space is not getting crowded any
time soon.
- M K Anand
Chief Executive Officer & Managing Director,
Times Television Network Limited
Implementation of DAS in Phases III & IV is expected

to be more challenging with respect to logistics
requirements and financial commitments required on
behalf of the MSOs.
Scale of effort
As per our discussions with industry participants, there
is a requirement of ~65 million digital cable set top boxes
to be rolled out in Phase III & IV areas across the country.
In contrast, MSOs had to rollout ~22 million STBs in
Phase I & II cities in 42 cities indicating that Phases III and
IV are expected to pose greater logistical challenges as
compared to Phases I and II.
Smaller MSOs will need to bear the

responsibility of Phases III & IV
The four large MSOs Hathway Cable & Datacom
Limited (Hathway), IndusInd Media Communications
Limited (IMCL), Den Networks Limited (Den) and SITI
Cable Network Limited (SITI Cable) were present in
three Phase I cities (except Chennai) and 18-29 Phase II
cities. However, they do not have significant presence or
dominant position in Phases III & IV. The focus for most
of the large MSOs seems to be consolidation in Phase I
& II cities, before they begin to expend efforts on DAS in
Phases III & IV. Hence, smaller regional MSOs and ICOs
will need to take up the responsibility of cable digitisation
in Phase III & IV areas. Several of these regional MSOs do
not have the experience and learnings from Phase I & II
cities.
Funding constraints
Phases III & IV require significant investment in digital
head-ends and other back-end infrastructure apart from
STB costs. Funding may prove to be a challenge even for
large MSOs, since revenue benefits from Phase I & II
have not started flowing in. At the same time,
Since the larger MSOs alone would not be

leading the charge in Phases III & IV, the
concern is that the smaller regional MSOs would
not have adequate funding and experience of
planning for Phases I & II to be able to manage
digitisation in Phases III & IV.
- Rajesh Kaul
President,
MSM Discovery Private Limited
broadcasters are expecting higher revenue share from

MSOs in Phase I & II cities, while carriage fee is on a
downward trend. All this has led to increasing funding
constraints for MSOs.
Given the challenges, industry stakeholders believe that
regulatory push would be all the more important in DAS
implementation in Phases III & IV cities.
In spite of these challenges, some regional MSOs have
started rolling out digital STBs in Phases III & IV cities
primarily Gujarat Telelink Private Limited (GTPL) in Gujarat
& Kolkata, Kerala Communicators Cable Limited (KCCL)
and Asianet Satellite Communications Limited (Asianet)
in Kerala, Fastway Transmission Private Limited in Punjab,
Manthan Broadband Services Private Limited (Manthan)in
Eastern region and Ortel Communications Limited (Ortel)
in Orissa.
MSO landscape in India
Source: Company websites, KPMG in India analysis, Industry discussions conducted by KPMG in India
Note: The coloured markers indicate significant presence in the region.
Unless the MSOs consolidate their business

model in Phase I & II cities, they would not be
able to go ahead with rolling out STBs in the rest
of the country. The logistics and sheer size of the
opportunity would delay the process. However,
expect it to eventually fall into place like it did in
Phase I & II cities. Also, it is imperative that the
regulatory push continues for Phases III & IV of
digitisation to be completed.
- Punit Goenka
Zee Entertainment Enterprises Limited and
Chairman, Broadcast Audience Research
Council (BARC)
DAS rollout in Phases III & IV needs significant

investment by MSOs while the ARPUs from the
normal satellite channels will be lower than
in Phases I & II. We need new technology of
distribution such as HITS to evolve fast. The
need for localised content will play an important
role, so non-satellite content aggregation
will become important. Bulk bundling from
Broadcasters to MSOs for all channels, will
not provide digital cable platforms the right
packaging. I expect that it may take over a year
from the date of blackout of analogue for stability
in Phases III & IV areas.
- Subhashish Mazumdar
Senior Vice President Marketing & Customer Relations,
IndusInd Media Communications Limited
18
19
HITS The answer to the Digitisation challenge in Phases III & IV?
Tony De Silva
Group CEO (Media),
IndusInd Media Communications Limited
As we draw a line under a hectic year that was characterised by frantic
seeding of set top boxes in Phase I and II cities, the cable distribution
industry is keeping a wary eye on what lies in front of them in Phases
III and IV. Phase I and II entailed installing Digital head ends, cable
infrastructure and STBs in roughly 20 million homes in a relatively well
defined and densely populated geographical area of India. Covering
this ground has stretched the financial and operational resources of the
cable industry to the limit, with very little clarity on the payback period
on their investments so far.
Phases III and IV will entail covering a much larger and more sparsely
populated geographical area often coupled with difficult terrain.
With roughly 65 million homes needed to be digitised, the investment
needed will also be of a much larger magnitude a significant
portion of which will need to be shouldered by smaller operators
with inadequate access to funding. In a sense the real digitisation
challenges has only begun now.
If the industry truly wishes to achieve its objectives of digital signals,
addressability and tiering across the rest of India, the prevailing
cable and DTH models may not be enough. HITS (Head end in the sky)
technology, will play a key role in achieving the goal of 100 per cent
digital distribution in the country. Unlike traditional cable where a
single headend can cater to a defined geographic areas and requires
significant investment in cabling infrastructure to carry a good quality
signal to the LMO and the home, HITS uses a virtual headend from one
single location that broadcasts its signal via a transponders to multiple
LMOs.
The LMO is able to downlink the signal, add any local customisation to
the digital feed and send it to the customer. As long as the customer
has a STB and an addressable system, they are able to view the
channels that they have chosen.
For Independent operators that have less than ten thousand end points
per digital headend or LMOs who wish to retain their independent
business model in the digitised world, HITS offers a number of number
of advantages:
It does not require investment in a new digital headend and only

nominal capex expenditure to the operators existing infrastructure
Encryptions, SMS, billing etc. are handled centrally by the HITS

provider and the investment can be amortised over a large user
base
Operator focuses on customer acquisition, break fix and retention,

STB standards are centrally defined and upgrades managed
centrally
Operators can decide mode of STB funding, content strategy and

retain control over their network, using the HITS provider purely as
a signal provider
Better rain attenuation as HITS operates on C-band which is less

susceptible to rain fade than C-band
Ability for the operator to insert local language content at the last
mile and customise feed for local tastes
Based on experience of countries with similarly geographical

challenges and fragmentation in the distribution space, it is fair to
expect at least 2-3 HITS services to be available in India in the next few
years that will compete with digital cable and DTH. How the pie gets
divided in the next phase will be interesting to watch.
Unless otherwise noted, all information included in this column/ article was provided by Tony De
Silva. The views and opinions expressed herein are those of the authors and do not necessarily
represent the views and opinions of KPMG in India.
ARPU improvement the next big challenge

While DTH operators have managed to realise
subscription ARPU increases, digital cable has some way
to go before it can start achieving similar increases. As
MSOs start implementing better addressable systems
and tiering, growth in cable ARPUs will be driven by
appropriate channel packs, premium content channels,
HD channels, pay-per-view and other value added
services.
ARPU growth is critical to the growth of this

industry. Increase in ARPU will not materialise
through negotiations alone, but through true
value addition in the minds of consumers. Value
additions would imply the onset of a tiered
product offering much like in other industries
where there is a 1:10 ratio between the lowest
paying subscriber and the highest paying
subscriber.
- Sanjay Gupta
As this happens, MSOs will have to aggressively

compete with DTH operators to retain their subscriber
base, while providing the subscriber with an equivalent
or better value proposition and customer service. Service
quality will be critical for both subscriber retention as well
as ARPU improvement and will need a change in mindset
from B2B to B2C business model.
MSOs also need to upgrade and leverage their existing
infrastructure to capitalise on the broadband opportunity
in the mid-term, which can lead to significant ARPU
increase. Apart from revenues from broadband services,
this will enable MSOs to also offer premium pay-perview services and interactive services, which can further
boost the ARPU. Some of the large MSOs have started
investing in broadband infrastructure, for instance,
Hathway Cable and Datacom Limited has started offering
50 mbps broadband plan to users in South Mumbai,
powered by DOCSIS 3.0.8
The next big opportunity for MSOs is offering

high speed broadband services to subscribers
to both improve ARPU and as a competitive
advantage against DTH. MSOs will need to
invest to capitalise on the dual play (TV +
internet) opportunity in the near term.
- Jagdish Kumar
Hathway Cable & Datacom Limited
The Changing Face of MSO Operations
Vynsley Fernandes
Director,
Castle Media Private Limited
Digitisation has altered the role of an MSO from being a
conventional signal-only provider to a LMO - to a service provider
to the end customer. In effect, the MSO-LMO relationship vis--vis
the customer is slowly metamorphosing into a semblance of a
joint go-to-market approach. Transitioning from a B2B to this B2C
model has not been easy for MSOs and there is still perceptible
angst experienced in dealing with the increased touch point with a
customer who expects a radically higher Quality of Service.
If the increasing competition from other MSOs and the betterorganized DTH players is a threat, the complex digital technical
architecture continues to challenge the core operations of MSOs.
With significant investments made in the business, the MSO
collective needs to regroup and consolidate on its strategy to grow
ARPUs and monetize the network. And technology will be at the
forefront of driving this change.
MSOs need to strategize the enabling of technology across
various functions of the business the digital headend, SMS,
Conditional Access System (CAS), Billing Systems, STBs, network
infrastructure including fibre optics, value-added service (VAS)
delivery, broadband connectivity etc.
Clearly, the rush to seed STBs has resulted in multiple and
disparate generations of STBs being planted with limited
capability. Coupled with limited attention to technology upgrade
capability and integration; MSOs face challenges in flexible billing,
packaging of services, providing VAS, broadband and going the
prepaid billing route.
Top 5 Tips for an MSO looking to make the transition to

Digital:
Get the STB Strategy right on Day Zero: Most MSOs are guilty
of poor selection of STBs. With a focus on analog sunset dates and
price and little or no attention to the feature set, most MSOs rolled
out a slew of disparate STBs from multiple vendors. The result is
that not only do these STBs lack in capabilities and features but
also cause operational nightmares.
It is imperative for an MSO to determine an appropriate STB
strategy beyond conventional recording and HD capabilities
and focus on the total cost of ownership rather than instant
gratification of low pricing. The focus on feature set should
extend to the technical configuration & the memory capacity and
MSOs must emulate DTH who have perhaps two to three types of
STBs in their entire network. Whilst reducing operational costs,
the approach also affords the MSO new revenue streams from
applications like value-added services and localized advertising to
interactive e-commerce.
08. Hathway introduces ultra high speed internet in South Mumbai, Business Standard,
7 October 2013
Invest in a future-proof Subscriber Management System:

The focus of DAS is addressability up to the subscriber level
and the enabler for addressability lies within a good Subscriber
Management System. The SMS is in effect the MSOs
20
21
sales person. By tracking subscriber preferences and spends,

the SMS becomes a powerful tool to generate critical business
intelligence for an MSO.
Not unlike the west, MSOs need to evaluate and implement worldclass SMS solutions that could facilitate flexible push and pull
sales across multiple Revenue Generating Units (RGUs), comprising
video, broadband & high-speed internet, video-on-demand services
and even interactive home shopping.
Optimize the ground network Most MSOs are sitting on
hundreds, if not thousands of kilometers of optical fibre. Yet, only
a couple have leveraged their network to offer broadband and
high-speed internet. Unlike video, where ARPUs continue to stutter,
broadband ARPUs are headed north on account of greater usage. So
whilst price per Mbps will continue to fall, net ARPUs will grow as
subscribers opt for faster bandwidth and increased downloads.
Broadcasting
The television broadcasting industry faced a challenging
operating environment in 2013. While television
advertising revenues continued to face the pressures
of global and national economic slowdown, regulatory
changes created an environment of uncertainty and
added to the complexities of the operating environment.
Fragmentation in certain genres such as News and
Movies is also impacting profitability of broadcasters.
New channel launches in 2013 was limited on account
of the weak market environment as well as due to the
MIB not approving new channel licenses. The new
channel launches consisted primarily of niche genres with
premium pricing, and a few regional channels and news
channels.
MSOs need to evaluate their installed networks and test their

connectivity for offering high-capacity broadband services at the
corporate and retail level. Select grids, if not all, need to be armed
with future proof technology and redundancy capability.
Packaging & Bundling In recent years, with the advent of on-line
platforms, several MSOs in mature television markets have been
faced with prospects of zero growth or dwindling numbers of cable
households. Yet, ARPU growth has been consistent by and large.
Probably the single biggest factor contributing to this phenomenon
has been innovative packaging and bundling of RGUs.
Packaging in effect refers to creation of smart packages of content
by region, genre, language etc. that help push subscriber off-take.
And in a country like India with so many languages and an equal
number of genres, it might be useful to develop packages that
could be customised to subscribers preferences. Again, the right
choice of an SMS and CAS system is central to delivering flexible
packaging.
A tightly integrated and modular SMS & CAS system also facilitates
MSOs to bundle multiple RGUs, allowing subscribers to cherry pick
in real-time from a bouquet of services and products comprising
SD channels, HD channels, broadband & high-speed internet,
on-demand programming, active and interactive applications, multiscreen television, home security to mention a few.
Digital is not Analog And lastly is the fact that digital is not
analog. Just about every MSO and LMO has faced challenges in
making the transition and realised much later, its not just about
putting in a digital headend and drawing a signal to a subscriber
through a digital STB. Its about understanding how every
component of the digital jigsaw fits into place from a digital
headend and integration of a CAS and SMS system to optimising
the ground network for a digital signal up to the STB.
For any new MSO entering the digital space, it is imperative to train
and orient virtually every member of the organization in appreciating
technology in the digital model. Whilst the obvious focus would
be on training technicians on the nuances of digital technology
and troubleshooting; training needs extend beyond. Whilst
marketing and sales teams will need to understand the leveraging
capabilities of an intelligent SMS; and customer services will have
to re-orient themselves to address complex technical queries; MSO
management teams will need to constantly innovate to optimize the
digital model for sustained growth.
Unless otherwise noted, all information included in this column/ article was provided by Vynsley
Fernandes. The views and opinions expressed herein are those of the authors and do not
necessarily represent the views and opinions of KPMG in India.
While ad sales continue to see growth and the

broadcasting segment has been witnessing
investments, profitability is under pressure. The
regulators are focusing on 3-4 big things that are
creating a churn in the broadcasting sector. The
impact of that however is still about 6-8 quarters
away so it will be a wait and watch game for
now to see what this leads to. The ripples of the
eventual impact, I believe, will be seen across
the media industry and will not just be restricted
to TV.
- Sujit Vaidya
Vice President & Chief Financial Officer,
Disney India
TRAIs efforts to enforce the 12 minute ad-cap regulation

invited a divided response from the industry and
contributed to the challenges of the broadcasters
especially those with significant dependence on
advertising revenues. At an aggregate level, the total TV
advertising market is estimated to have grown around
9 per cent in 2013 to INR136 billion, lower than the 11
per cent projected in our report last year. Going forward,
television advertising in India is expected to grow at
a CAGR of 13 per cent over 2013-18, to reach INR220
billion.
The ideal ratio between advertising and

subscription and advertising revenues for
broadcasters is 50:50. Indian broadcasters
are currently lagging behind on subscription
revenues in the mix. However, expect this to
correct once the benefits of digitisation start
playing out. Not only will this help broadcasters
overcome dependence on advertising revenues
which tend to be cyclical, it will also help them
get better advertising rates once they have a
significant annual revenue stream assured in the
form of subscription revenues.
- Paritosh Joshi
Member - TechComm, BARC and
Principal, Provocateur Advisory
In the face of fundamental changes in the

operating environment in 2013, players in the
broadcasting industry reacted in a matured
manner with a clear strategy, unlike in the past.
- Bharat Ranga
Chief Content and Creative Officer,
Broadcaster Industry size

473
500
450
400
361
350
INR Billion
Subscription revenue is expected to be the driver of

growth for broadcasters, growing at an estimated CAGR
of 26 per cent from 2013 to 2018. Increase in the declared
subscriber base and higher revenue share is expected
to drive up the share of subscription to total broadcaster
revenue from 34 per cent in 2013 to 46 per cent in 2018.
413
253
292
300
221
239
250
200
172
150
136
125
100
50
69
57
2012
195
205
182
2013
152
87
2014P
Advertisement revenue
120
2015P
191
166
2016P
2017P
Subscription revenue
220
2018P
22
23
The Ad Cap Story So Far

22 March 2013
1 October 2013
6 December 2013
TRAI issues the Quality of Service

Regulations putting into effect the
12 minute ad-cap rule.
The 12 minute ad cap comes into

effect. Most IBF members start
following the 12 minute ad cap.
Supreme Court rules that TDSAT

has no jurisdiction to adjudicate
on TRAI disputes.
10 April 2013
30 August 2013
TRAI gets tough & issues ad

reporting format to be submitted
quarterly. Sets off negotiations to
find common ground.
NBA appeals to TDSAT and

obtained a repreive which
prevents TRAI from taking coercive
action against erring channels.
TDSAT dismisses NBA appeal

against TRAI taking cognizance of
the SC order.
16 August 2013
19 December 2013
TRAI files criminal cases againts

14 broadcasters for not complying
with QoS regulations.
The Delhi High Court provides

interim relief to broadcasters.
Next hearing on 13 March 2014.
29 May 2013
TRAI and Broadcasters reach an
agreement. 20 min ad cap for
news and 16 min ad cap for
others till 30 September 2013.
11 December 2013
To ensure better quality of experience for the consumer,

TRAI notified the Quality of Service (QoS) Regulation
in March 2013, capping duration of commercial time on
television channels. The regulations restrict maximum
duration of advertisements to 12 minutes per hour, allow
for advertisements only during breaks of live sporting
events, prohibit partial advertisements and require
broadcasters to submit details of advertisements carried
on their channels in a specified format to TRAI. This
expectedly did not go down well with many broadcasters
already facing subdued ad revenue growth on account
of the soft macro-economic environment. After a series
of discussions and MIBs support of a less aggressive
timeline for reduction of advertising minutes, in line with
the digitisation schedule, the regulator agreed to give
broadcasters more time. A new ad limit per hour was
decided upon, which permitted 20 minutes of ad time for
news channels and 16 minutes of ad time for others till 30
September 2013, following which the 12 minute ad-cap
would take effect on all channels.
From the long-term perspective, the 12 minute

ad cap is a welcome move and will help in
improving viewership experience and keeping
non-serious content players out. Even mature
markets like U.K. and the U.S.A. have similar
regulations.
- Narayan Ranjan
Chief Financial Officer,
Viacom 18 Media Private Limited
Most members of the Indian Broadcasting Federation

(IBF) with some exceptions implemented the ad-cap
regulation from October 1. Hindi GECs with an existing ad
inventory of 14-169 minutes per hour seemed relatively
unaffected with the TRAI order and many of the channels
announced that they would make up for the inventory
reduction by hiking the 10 second ad rates by 20-3010, 11
per cent.
10. Channels hike ad rates to offset time limit, Livemint.com, 9 August 2013
11. Top GECs seek to hike ad rates to offset 10+2 ad cap impact, Exchange4media.com, 3 June 2013
However, the News Broadcasters Association (NBA),

independent music channels and several regional
broadcasters challenged TRAIs mandate in the Telecom
Disputes Settlement Appellate Tribunal (TDSAT). TRAI
on its part lodged cases against 14 television channels
for violation of ad-cap regulations. The NBA obtained
an interim relief from the tribunal that prevented the
regulator from taking any action against broadcasters not
toeing the ad cap line. Before the TDSAT could deliver
its judgment on the matter, the Supreme Court ruled
that TDSAT had no power to adjudicate on petitions
challenging TRAI regulations. The broadcasters appeal
was dismissed by TDSAT saying the matter does not
fall under its jurisdiction and that the appellants could
challenge the validity of TRAIs regulations before the
Delhi High Court. The Delhi High Court passed an interim
order prohibiting TRAI from taking any coercive action
against channels not following the ad-cap regulations.
It also maintained that the broadcasters will have to
keep submitting weekly reports on ad duration and set
13 March 2014 as the next hearing date. The Delhi High
Courts reprieve in the matter is only temporary and
the appellants may have to pay damages based on the
accounts maintained with TRAI if they lose the appeal.
second half of the year was particularly challenging with

several companies reportedly cutting their festive season
ad expenditure.13 The Fast Moving Consumer Goods
(FMCG) sector was an exception and in spite of facing
consumption pressures, companies pushed up their
advertisement and sales promotion spends by 15-2014 per
cent in pursuit of volume growth.
2013 was one of the toughest years in the

recent past in terms of ad revenue growth. The
bearish view of the macro-economic situation
and general cynicism adversely affected the
advertising growth with CMOs across sectors
cutting ad spends during the year.
- Uday Shankar
The year started off well for advertising on TV,

including a good season of IPL. However, the
overall slowdown in the economy combined with
other factors such as inflation and depreciating
rupee impacted advertising revenues, resulting
in a single digit TV advertising growth for 2013.
News channels and music channels have taken

a stay at the High Court on the implementation
of the 12 minute ad cap. If this is strictly
implemented, impact could be around 15 per
cent of ad revenues in the short term because
the ad rates are not expected to increase in the
short term.
- Nitin Nadkarni
- R D S Bawa
Network 18 Media & Investments Limited
Top 10 categories advertising on TV

Economic woes continued to haunt
Advertisement spending continued to be affected by
persistent low growth in private consumption. Most of
the industries dependent on consumer spending saw
subdued revenue growth. Slowdown in the growth of
Private Final Consumption Expenditure (PFCE) is apparent
with the quarter ended June 2013 and September 2013
witnessing the two lowest growth rates in the last 37
quarters. PFCE grew at 1.6 percent and 2.2 per cent
year-on year in the first and the second quarter of the
financial year 2014 respectively.12 Prolonged economic
slowdown and a high interest rate environment impacted
consumer demand and corporate profits came under
further pressure due to sharp depreciation in rupee. As
per industry discussions, categories such as real estate,
consumer durables, automobiles, financial services,
travel and hospitality scaled down their ad spends. The
12. Urban Consumption Driven Sectors in Slow Lane, India Ratings and Research, 3 December 2013
13. Hit by severe slowdown, India Inc to halve ad spend this Diwali, The Economic Times, 27
September 2013
14. FMCG majors high on ad spends amid slowdown, Business Standard, 26 October 2013
Category
2012 (% share)
2013 (% share)
Personal Care/Personal Hygiene
13.7%
15.7%
Food & Beverages
14.3%
13.3%
Services
7.2%
8.1%
Hair Care
4.5%
4.7%
Auto
4.5%
4.4%
Personal Healthcare
4.0%
3.3%
Personal Accessories
3.7%
3.1%
Household Products
3.0%
2.9%
Telecom/Internet Service Providers
2.7%
2.6%
Laundry
2.3%
2.5%
Source: TAM AdEx, Period: Year 2012 and 2013, Medium: TV, Based on analysis of Ad volumes in
seconds. Copyright reserved with TAM MEDIA RESEARCH PRIVATE LIMITED; Any use of
TAM data (or derivative thereof) mentioned herein without express permission of TAM shall
be treated as illegal
24
25
Top 10 advertisers on TV
Advertiser
2012 (% share)
2013 (% share)
Hindustan Unilever Ltd
7.6%
8.9%
Cadburys India Ltd
2.4%
2.0%
ITC Ltd
2.1%
2.1%
Reckitt Benckiser (India) Ltd
2.2%
1.8%
Procter & Gamble
1.7%
1.8%
Ponds India
1.4%
1.6%
Colgate Palmolive India Ltd
1.4%
1.3%
Coca Cola India Ltd
1.4%
1.3%
Bharti Airtel Ltd
0.8%
0.9%
LOreal India Pvt Ltd
0.9%
0.9%
Source: TAM AdEx, Period: Year 2012 and 2013, Medium: TV, Based on analysis of Ad volumes in
seconds. Copyright reserved with TAM MEDIA RESEARCH PRIVATE LIMITED; Any use of
TAM data (or derivative thereof) mentioned herein without express permission of TAM shall
be treated as illegal
Broadcaster-Advertiser standoff on billing
Genres
The middle of the year saw a tussle break out between

broadcasters and advertisers over the billing process for
commercials carried on television channels. Broadcasters
received income tax notices for non-payment of TaxDeducted-At-Source (TDS) on the 15 per cent agency
commission listed on the bills issued to media agencies,
and demanded that the advertising agencies move
from the conventional practice of gross billing (inclusive
of agency commission) to net billing. Advertisers who
derived revenues as a percentage of the gross bill were
not willing to change their accounting practices leading to
a standoff. Many broadcasters took commercials off air
as a retaliatory measure against non-complying agencies.
Television channels finally resumed commercials after
two days of blackout following an agreement between the
IBF, the Advertising Agencies Association of India (AAAI)
and the Indian Society of Advertisers (ISA). Under the new
process, the agencies moved to net billing with release
orders containing a legend that mentions the gross value
in line with the erstwhile industry practice.15
Hindi and Regional GECs continue to be the key drivers of

television viewership, accounting for 48 per cent of total
viewership in 2013. Hindi GECs continued their dominant
position in 2013 with a 30 per cent share of viewership,
higher than its share of 29.3 per cent in 2012. Regional
Entertainment channels (excluding News) collectively
accounted for 23.1 per cent of the total viewership with
Regional GECs across languages accounting for 18 per
cent share of the viewership. Hindi Movies genre saw
its viewership increase from 13 per cent in 2012 to 15.1
per cent in 2013. Kids and Music genres also witnessed
growth and their viewership stood at 7.5 per cent and 3.6
per cent, respectively in 2013. News channels (including
Regional News) accounted for 7 per cent viewership in
2013, down from 7.2 percent in 2012.16
15. Ads resume as channels, agencies reach compromise, Livemint.com, 3 May 2013
16. TAM; Week 1 to 52, 2013; All India CS4+ market; Copyright reserved with TAM MEDIA
RESEARCH PRIVATE LIMITED; Any use of TAM data (or derivative thereof) mentioned herein
without express permission of TAM shall be treated as illegal
Viewership share by genre - 2013

1.2%
Infotainment
1.7%
Regional Music
2.6%
Sports
3.3%
Hindi News
3.4%
Regional Movies
3.6%
Regional News
AdEx share by genre - 2013

1.1%
English Entertainment
0.1%
English News
8.6%
Other
30%
Hindi GECs
5.2%
English News
4.5%
English Entertainment
6.0%
Other
2.0%
Infotainment
27.1%
Hindi GECs
1.5%
Regional Music
4.0%
Sports
8.6%
Hindi News
16.2%
Regional GECs
2.1%
Regional Movies
3.6%
Music
7.5%
Kids
18.0%
Regional GECs
15.1%
Hindi Movies
6.7%
Hindi Movies
7.9%
Regional News
4.1%
Music
4.2%
Kids
Source: TAM; Week 1 to 52, 2013; All India CS4+ market; TAM AdEx is based on rate-card based value share; Copyright reserved with TAM MEDIA RESEARCH PRIVATE LIMITED; Any use of TAM data (or derivative
thereof) mentioned herein without express permission of TAM shall be treated as illegal
Hindi GEC
In contrast to dynamic channel rankings of 2012, this
year had Star Plus retaining its number one spot, Colors
taking the second place for most of the year with Zee
TV close at its heels in the number three position.17
Flanking channels of networks such as Life OK and Sab TV
improved significantly in their ratings taking the fourth and
fifth position respectively for most of the year. Overall, ad
growth for the genre was between 13 to 1518 per cent,
though individual players saw different growth. The genre
saw ad rates per slot increase by 10 to 1518 per cent.
Industry estimates pegged ad rates at INR0.15 to 0.25
million on an average per 10 second slot for fiction shows
in prime time.
In an environment of slow advertising growth

and general economic slowdown, established
models such as Hindi GECs and Regional GECs
are getting rewarded, with advertising spend
flocking to mainstream channels which are
considered safer bets.
- Narayan Ranjan
Hindi GECs continued to have a fiction:non-fiction ratio of

80:20, with non-fiction shows being used largely to create
buzz and word-of-mouth. Channels bet on innovation
and displayed an increased appetite for risk with a series
of new and clutter-breaking launches in fiction shows.
Hindi GECs came up with several high-budget fiction
offerings in 2013 24 (Colors), Jodha Akbar (Zee
TV), Mahabharat (Star Plus) and Bharat Ka Veer Putra:
Maharana Pratap (Sony). Broadcasters also drew heavily

from history and mythology. With lifecycle of fiction
shows becoming shorter, channels are moving towards
shows driven by characters rather than storylines.
On the non-fiction side, apart from Comedy Nights with
Kapil there were no major launches. Most Hindi GECs
continued with newer seasons of old non-fiction formats.
Channels are seen to be settling for 3-4 big format
shows per year with one tent-pole non-fiction show
every quarter. Colors hit viewership gold with the launch
of Comedy Nights with Kapil which soon became the
top-rated show for the network and one of the biggest
highlights of Indian television in 2013. The runaway
success of Comedy Nights with Kapil and continued
performance of Taarak Mehta Ka Ooltah Chashmah (Sab
TV) should help the Comedy genre but it remains to be
seen if the genre gets revived in a big way given that it is
considered to be difficult to succeed in.
2013 reaffirmed our belief that viewers not just

demand but expect a certain signature quality
and consistency in stories and characters which
is unique to content brands. Brands that went
on to become the preferred choice, managed
to offer content and an experience in a manner
that was relevant to viewers while continuing to
sustain their interest.
- Vijay Subramaniam
Vice President and Head of
Content & Communications,
Media Networks, Disney India
17. How Hindi GECs found order in 2013, Televisionpost.com, 1 January 2014
26
27
Top characters 2013 - Fiction

Rank
Top characters 2013 - Non-fiction
Character
Show
Channel
Rank
Character
Show
Channel
Jethalal
Taarak Mehta Ka Ooltah

Chashmah
SAB TV
Kapil Sharma
Comedy Nights with Kapil
Colors
Anandi
Balika Vadhu
Colors
Amitabh Bachchan
Kaun Banega Crorepati
Sony
Ram Kapoor
Bade Achhe Lagte Hain
Sony
Salman Khan
Bigg Boss
Colors
Sandhya
Diya Aur Baati Hum
Star Plus
Madhuri Dixit
Jhalak Dikhhla Ja
Colors
Mahadev
Devon Ke Dev Mahadev
Life OK
Gauhar Khan
Bigg Boss
Colors
Jodha
Jodha Akbar
Zee TV
Anoop Soni
Crime Patrol
Sony
Priya
Bade Achhe Lagte Hain
Sony
Rannvijay
MTV Roadies
MTV
Akshara
Yeh Rishta Kya Kehlata Hai
Star Plus
Sanjeev Kapoor
MasterChef Kitchen Ke
Superstars
Star Plus
Madhubala
Madhubala
Colors
Raghu
MTV Roadies
MTV
10
Maharana Pratap
Maharana Pratap
Sony
10
Shreya Ghoshal
Indian Idol Junior
Sony
Source: Characters India Love - Ormax Media
Source: Characters India Love - Ormax Media
Another trend in Hindi GECs which has taken root in 2013

is segmentation of the prime time. Most channels are
making a clear distinction among the prime time slots to
target different groups at different times to maximise their
TV ratings.
Hindi GECs are looking at slicing and dicing

the prime time band to generate maximum TV
ratings. While 6-9PM slots on weekdays are
targeted at semi-urban audience, 9-11PM
slots on weekdays are targeted at the metro
audience. Similarly, early prime time slots have
female centric programming, while the latter
slots have more of a family viewership quality,
with something that will engage the male
audience as well.
- Ekta Kapoor
Joint Managing Director,
Balaji Telefilms Limited
Over the past couple of years, broadcasters are also

increasingly focusing on the under-served male audience
as evident in the increasing number of crime and
adventure related shows such as Crime Patrol (Sony),
Savdhaan India & Shapath (Life OK), 24 & Shaitaan:
A Criminal Mind (Colors), Fear Files (Zee TV) and Arjun
(Star Plus). The previous year had also witnessed the
launch of male-centric action adventure channel, Big RTL
Thrill.
Male audience has been ignored with most

TV programmes targeting women. There is a
definite gap that is being noticed now. This can
be seen in the rise of comedy, popularity of
shows such as Crime Patrol & Savdhaan India,
huge investments in sports and production of
24, a male centric show. The need is for content
which engages the male viewership without
alienating the female audience.
- Shailesh Kapoor
Co-Founder & Chief Executive Officer,
Ormax Media Private Limited
Top 10 Fiction Serials on Hindi GECs - 2013

Rank
Serials
Channel
Average
GVT
Diya Aur Baati Hum
Star Plus
9,696
C.I.D.
Sony
8,944
The Adventures Of Hatim
Life OK
7,564
Jodha Akbar
Zee TV
7,391
Fear Files
Zee TV
7,358
Yeh Rishta Kya Kehlata Hai
Star Plus
7,330
Balika Vadhu
Colors
7,066
Pyaar Ka Dard Hai
Star Plus
6,997
Saathiya Saath Nibhana
Star Plus
6,882
10
Qubool Hai
Zee TV
6,227
Source: TAM; HSM 4+ Week 1 to 52, 2013; Copyright reserved with TAM MEDIA RESEARCH PRIVATE
LIMITED; Any use of TAM data (or derivative thereof) mentioned herein without express
permission of TAM shall be treated as illegal
Top 10 Non-Fiction Serials on Hindi GECs - 2013

Serials
Channel
DID Super Moms
Zee TV
Comedy Nights With Kapil
Average GVT
Top 10 Hindi films on Hindi GECs - 2013

Movie
Channel
TVTs
17,114
Chennai Express
Zee TV
19,541
Colors
16,056
Khiladi 786
Colours
10,390
Indias Best Dramebaaz
Zee TV
15,214
Dabangg-2
Star Plus
9,828
Maruti Suzuki Dance India Dance-4
Zee TV
15,164
Son Of Sardar
Star Plus
9,151
Nach Baliye 5
Star Plus
14,945
Boss
Colours
8,644
Oral-B DID Super Moms
Zee TV
14,691
OMG Oh My God
Colours
7,777
Jhalak Dikhhla Jaa
Colors
13,017
Student Of The Year
Sony
7,632
Indian Idol-Junior
Sony
12,475
Yeh Jawaani Hai Deewani
Sony
6,995
Bigg Boss Season 6
Colors
11,498
ABCD (Any Body Can Dance)
Zee TV
5,571
Bigg Boss Saath 7
Colors
10,799
Aashiqui 2
Sony
5,238
Sustained movie acquisition by broadcasters

Broadcasters continue to invest in movie acquisition with
the upper limit for a single film deal increasing from the
INR 200 million range to the INR500 million range over
the past few years.19 Broadcasters are now entering into
multi-movie deals with studios and actors to build up an
inventory of fresh films. Star India inked a deal valued
at INR420 billion with Ajay Devgn for exclusive satellite
rights of all his releases till 2017. This follows a similar pact
between Star India and Salman Khan for around INR 521
billion for the latters films for a period of five years.
Zee Entertainment Enterprises (ZEE) acquired a marquee
property in 2013, Chennai Express, in a deal valued
upwards of INR40022 million plus for seven years. The
Chennai Express deal linked the satellite rights price
to the films box office performance with the producer
reportedly getting an additional INR20 million for every
INR 100 million the film made at the box office over and
above the cutoff of INR1,300 million. As per news reports,
the network earned an estimated INR15022 million from
the films world premiere. Multi Screen Media (MSM)
has a line-up of A-lister movies to premier in 2014 having
bought C&S rights for Goliyon Ki Raasleela Ram-Leela,
Krishh 3 (for INR380 million23) and Dhoom 3 (for INR750
million23). Dubbed versions of South Indian films continue
to do well and films starring A-listers of South Indian
cinema are now being sold at INR50-70 million up from
INR20 million.19

20. Ajay Devgn in Rs 400-crore pact with Star India for movie rights, The Economic Times, 4 March
2013
21. Salman Khan signs Rs 500 cr TV rights deal with Star India, Firstpost.com, 23 January 2013
22. Zee buys satellite rights of Chennai Express for its upcoming channel & Pictures, The Economic
Times, 1 August 2013
The time interval between a movies theatrical release and

its TV premier has declined considerably as broadcasters
and producers want to capitalise on the freshness of
the film in the viewers mind and minimise the impact
of piracy. Broadcasters are also promoting movie
premiers in a big way using print, television, outdoor and
digital media. The large national networks are currently
procuring 20-2524 fresh movies a year each with a big and
a small film premiering every month. While competition
among the large TV networks for acquisition of movie
rights remains high, some broadcasters have indicated
that they may be less aggressive than earlier and will buy
movie rights only at the right price.
Costs of acquiring movie C&S rights continued

to increase in 2013. At this rate, movie rights are
becoming economically unviable and generate
negative ROIs for the Broadcasters. We will
need to evolve more rationale success-linked
movie acquisition criteria.
- Sudhanshu Vats
Group Chief Executive Officer,
23. Bollywood battles for the small screen satellite rights to outshine each other, India Today, 25
December 2013
28
29
Hindi Movies
Hindi Movies accounted for a viewership share of
15.125 per cent in 2013, making it the second largest
genre after Hindi GEC. This genre is highly competitive
with a plethora of channels competing for viewership
and advertising, while competition for fresh content is
pushing up movie acquisition costs. Most movie channels
of the large broadcasters are delivering 50-60 GRPs per
week, down from over 100 GRPs for the leading channels
a few years ago.26 Our industry discussions indicate that
the 12 minute ad cap is another reason why broadcasters
are introducing flanking movie channels so as to
monetise the same content through additional advertising
inventory. ZEE launched another Hindi movie channel &
Pictures in 2013.27
In spite of the challenges of a fragmented viewership and
advertiser base, networks continue to invest significant
sums in acquiring new movies and premier them either
on their GECs or their movie channels. As the competition
in the genre intensifies further, channels will look at
differentiating themselves by establishing a niche within
the genre and offering a better consumer experience
through interactivity and content innovation.
Regional Entertainment
Regional entertainment channels comprising mostly of
Regional GECs, Regional Movies and Regional Music
accounted for 23 per cent viewership share in 2013, lower
than the 26.4 per cent in 2012.25 Similar to HSM, Regional
GECs are the dominant genre with 18 per cent share
followed by Regional Movies which accounted for 3.4 per
cent of viewership in 2013.25
Viewership share of regional channels - 2013

1%
Oriya
3%
Others
6%
Malayalam
11%
Bengali
1%
Gujarati
1%
Bhojpuri
27%
Tamil
12%
Kannada
14%
Marathi
24%
Telugu
Source: TAM; All India 4+ Week 1 to 52, 2013; Copyright reserved with TAM MEDIA RESEARCH
PRIVATE LIMITED; Any use of TAM data (or derivative thereof) mentioned herein without
express permission of TAM shall be treated as illegal
27. Zee to launch movie channel under new brand & pictures, The Hindu Business Line,
8 August 2013
Advertising growth in regional channels in 2013 was

weaker than the HSM channels on account of higher ad
inventory decline due to the 12 minute ad cap. Unlike
Hindi GECs, which had 14-16 of advertising minutes per
hour before the 12 minute ad cap, most Regional GECs
had 18-2226 minutes per hour of advertising. The Regional
Movie channels had even higher ad minutes per hours,
in the range of 22-2426 minutes, even going up to 30
minutes. As a result, implementation of the 12 minute ad
cap had a larger impact on the ad inventory for regional
channels.
The 12 minute cap definitely has a commercial

impact on all channels. In the short term
channels stand to lose revenue as they will need
to cut down inventory during prime time which
is sold at a premium. However, in the medium
term, one can expect that there will be a battle
for space and ad rates will move up benefiting
the channels.
- Ashok Vidyasagar
Business Director (South),
BIG Synergy Media Limited
Notwithstanding the weaker advertising growth for

regional channels in 2013, regional markets are expected
to continue to outpace the broader national TV advertising
market growth. The gap between advertising rates on
regional TV and print is more pronounced than national
TV and print which makes advertising on regional
language channels highly efficient. This gap is expected
to reduce over the medium term with increasing
localisation in content and advertiser preferences. The
key drivers of growth in the regional broadcasting space
continue to be richness of content, better cultural fit
and better engagement in contrast to overly mass Hindi
programming. National advertisers account for 7026
per cent of advertising on regional channels. Regional
channels also stand to benefit more from the successful
completion of Phases III & IV of digitisation, especially
niche genres in regional languages.
There is no better medium than TV if you are a

mass marketer wanting to communicate to a
large and widely dispersed target audience.
Most advertisers on regional channels are
large players with a national footprint but who
are savvy enough to localise their messaging.
The increasing presence of regional film stars
instead of Bollywood actors for the vernacular
versions of national ad campaigns confirms this
trend. The local advertisers who want to target
a specific local market prefer other media such
as OOH, FM radio or city supplements of national
dailies.
- S L Narayanan
Group Chief Financial Officer,
Sun TV Network Limited
Regional TV is hugely discounted and offers

tremendous value for money for advertisers
compared to regional print and even national-TV.
This has become even more obvious after TAM
has started reporting GVTs.
- Anuj Poddar
Executive Vice President- Regional Channel,
Viacom18 Media Private Limited
In the South Indian TV market, fiction shows

continue to be the bread and butter. Non-fiction
shows are not only more expensive to produce,
they have not managed to garner loyalty and
stickiness.
- K Madhavan
Managing Director,
Asianet Communications Limited (Star-Asianet)
Movies play a more dominant role in the content mix

on South Indian regional GECs than on Hindi GECs.
Apart from showing movies, comedy clips and music
from movies also comprise a significant component
of the content mix. In the past, Sun TV Network has
been the largest purchaser of C&S rights for movies
in South Indian languages garnering 70-8028 per cent
share of movies. However, in the recent years, Maa
TV in Telugu and Suvarna TV (Star-Asianet) in Kannada
have increased competition for C&S rights for movies.
Zee Entertainments South Indian language channels,
Zee Telugu and Zee Kannada have also increased their
investment in building a movie library. As a result
of increasing competition, C&S rights for movies in
South Indian regional languages have also increased
significantly. In the Telugu market, movie acquisition
costs for A-lister movies are now in the range of INR60-70
million, while in the Kannada market it ranges between
INR30-5028 million. Movie acquisition costs in the Tamil
market are even higher at INR 110-15028 million for A-lister
movies.
Regional channels in South India

South India is a key regional market from an
advertisement and subscription standpoint since it
accounts for more than 35 per cent of all C&S subscribers
in the country.28 The penetration of TV as well as C&S
in the South region is more than the all India average.
Tamil Nadu has the highest penetration of C&S and the
largest advertising market amongst the four states.28 Sun
TV Network is the largest regional broadcaster in India,
with leadership positions in three of the four South Indian
language markets.28 Three of the large national networks,
Star India, Zee Entertainment and the Network 18 Group
all have significant investments in Southern regional
markets and are continuing to fortify their presence in
regional markets, leading to intensifying competition.28
Content mix is heavily focused on fiction and movies in
South India. While non-fiction shows have made inroads
in the South Indian television market, they still remain
a small proportion of the content mix. As per industry
discussions, even though non-fiction shows help create
marketing buzz about the channel and help advertisers in
generating top-of-the-mind recall, they do not generate
enough viewership to justify the higher production costs.
The increase in purchase price of satellite

broadcasting rights of South Indian movies is
largely due to fewer movies by established stars
who command more, perceptible improvement
in quality of film making and the rising salaries
of directors and other technical experts who are
involved in production.
- S L Narayanan
Sun TV Network Limited
30
31
Adaptation of Hindi shows in regional TV markets

Regional markets are witnessing adaptation of successful
fiction and non-fiction shows from Hindi GECs. Kaun
Banega Crorepati has been remade in Kannada, Tamil,
Malayalam, Marathi, Bengali and Bhojpuri with reasonable
success in all the languages. For instance, in the Marathi
market, Kon Hoeel Marathi Crorepati powered ETV
Marathis ratings from 36,800 GVTs (Week 3-17) to 49,700
(Week 18-32) in 2013.29 Kannada version of another large
format non-fiction show, Bigg Boss, was launched by
ETV Kannada in 2013.30 In fiction, Balika Vadhu has
been remade in Kannada, Tamil and Telugu languages
and Uttaran has been adapted for the Marathi market.30
The success of these shows in regional markets is likely
to ensure the continuing of this trend in the foreseeable
future. However, each regional market has unique
audience characteristics that are distinct from the Hindi
audience and the ideas for remakes need to be carefully
selected in order to be successful. Some regional markets
such as Telugu are also seeing widespread adoption
of Hindi shows dubbed in the local languages, which
result in significantly lower costs while at the same time
audiences receive higher production quality of the Hindi
shows.30
News
The News genre arguably had the most tumultuous
year among all television genres. The News genre
comprising of general and business news in English,
Hindi and regional languages had to navigate through a
tough economic environment and adverse regulations.
The News genre is heavily fragmented, with 38931 news
channels competing for an estimated INR2530 billion ad
pie. Flat advertising growth, limited or no reduction in
carriage fees and low subscription revenues continued to
put pressure on the companies in the genre. Most news
broadcasters are currently not following the 12 minute adcap regulation. News broadcasters are leading the court
battle against TRAIs 12 minute ad-cap as they are one
of the most affected due to their advertisement-heavy
revenue mix. News channels expect their top lines to be
severely stressed if they are required to bring down their
existing ad inventory from 20-2230 minutes to 12 minutes.
Many companies such as Network18 Media &
Investments Limited, NDTV Limited, Zee Media
Corporation Limited, Bloomberg TV India Limited and
BAG Films & Media Limited saw layoffs, restructuring
and reorganization. With a focus on cost efficiencies, this
year also saw the emergence of Integrated Newsrooms
wherein a centralised team of journalists and crew serves
print, TV and digital properties of a network, leading to a
flatter and more efficient newsroom.
29. After the successful game show, the channel has launched two fiction shows to replace KHMC
but will also target to strengthen other slots, Afaqs.com, 9 September, 2013
31. 786 licensed Indian channels as on 31 January, Indiantelevision.com, 31 January 2014
33. Zee Media launches Zee Kalinga in Odisha, Indiantelevision.com, 3 February 2014
34. Sahara launches its Samay Rajasthan channel, Saharasamay.com, 18 September 2013
News channels have been trying to optimise on

costs by being conservative on infrastructure
spends and curtailing employee costs through
hiring freezes. However, for the news business
to become truly profitable, carriage costs need
to go down further and digitisation benefits need
to start flowing through. Though carriage fees
have come down in 2013, the decline has not
been in line with expectations.
- Ashok Venkatramani
Chief Executive Officer, Media Content &
Communications Services (ABP News)
The upcoming Loksabha elections in 2014 are expected

to boost the advertisement revenues of the new channels
with ad rates for political advertising nearly 30 per cent
higher than the average ad rates.30 However, challenges
continue to persist for the news business and much
depends on the legal outcome on the ad-cap case,
reduction in carriage fees and scheduled completion of
digitisation.
Regional news
In 2013, viewership share of Regional News stood at 3.6
per cent, lower than the 3.8 per cent in 2012.32 While the
growth may have slowed down marginally, the Regional
News space is still a high growth space. The ratio of local
to national advertisers is in the range of 25-4530 per cent
for different markets, with the share of national adveriters
being on the higher side in Marathi and Bengali markets.
Language differentiated news channels have

higher viewership than national Hindi News
channel in the region while regional/local news
channels in Hindi compete with National News
channels in their regions.
- Bhaskar Das
Group CEO,
Zee Media Corporation Limited (ZMCL)
There seems to be a growing trend of state-specific,

local news channels, leading to further fragmentation of
the ad pie. ZMCL acquired Prakash Jhas Maurya TV and
re-launched it as Zee Purvaiya for Bihar and Jharkhand
markets, following it up with the launch of Zee Kalinga
for the Odisha market.33 The Sahara India group launched
state-level news channel Samay Rajasthan.34 For
established news broadcasters, the incremental capex
of launching a state specific/regional news channel is
expected to be in the range of INR150-17030 million while
annual operating costs would be in the range of INR18025030 million per annum depending on the amount
of programming and local news content in the news
channel.
News content is fast becoming hyper local and

state-specific and is being rapidly consumed in
the regional languages.
- Jagi Panda
Managing Director,
Ortel Communications Limited (Odisha TV)
Kids
The Kids genre continues to be the largest after the Hindi
and Movies, contributing 7.5 per cent of the viewership
share in 2013.35 Industry discussions indicate that
advertising revenues in the Kids genre grew between
5-7 per cent in 2013. Advertisers from varied categories
such as FMCG, automobiles, laptops, mobile phones,
beverages and stationery advertise on Kids genre
channels.36 However, the genre continues to be underindexed with 7.5 per cent share of viewership but only 4.2
per cent share of the advertising revenue pie.35
The proportion of local content in the content mix is on
the rise buoyed by increasing demand of Indian content
as evident in the popularity of shows such as Chhota
Bheem, Motu Patlu, Roll No. 21, Pakdam Pakdai etc.
However, creating local content remains challenging
even though there is plenty of mythological and historical
literature to reference as content creators need to keep
political, cultural and religious sensitivities in mind. As
per industry discussions, content costs for the genre
range between INR1.5 to 2 million per 30 minutes of
programming which is higher than that of most fiction
shows on Hindi GECs. Developing content for Kids genre
has a long gestation period and it takes several seasons
to monetise the investment in animation and develop
characters that become popular with the target group.
According to industry participants, content trends in this
genre are very dynamic and at present, localised content
with a lot of action seems to be the preferred choice by
viewers.
Proportion of local content in Kids programming

is on the rise and currently contributes around
20-25 per cent of programming. However,
developing content in Kids genre has a long
gestation period and creating a pipeline of
content takes time.
- Siddharth Jain
Managing Director, South Asia,
Turner International India Private Limited
36. Kids is the number 3 priority genre in Indian television today, Indiantelevsion.com, 24 July 2013
32
With parity in distribution across India, the

choices that kids have at the press of a button
are limitless and broadcasters need to keep in
mind that compelling story telling, endearing
characters and great quality animation created
along the way is what will tick with kids today.
Digitisation has enabled broadcasters to offer
customised content catering to kids from tots
to teens. Having said that, comedy, humour
and action continue to be at the core of kids
programming.
- Nina Elavia Jaipuria
Executive Vice President & Business Head
Kids Cluster, Viacom18 Media Private Limited
33
Local animated TV Series on Kids genre

channels
Series Name
Broadcaster
Roll No. 21
Cartoon Network
Kalvakra Returns
Cartoon Network
Chhota Bheem
Pogo
Kumbh Karan
Pogo
Galli Galli Sim Sim
Pogo
Motu Patlu
Nickelodeon
Pakdam Pakdai
Nickelodeon
Keymon Ache
Nickelodeon, Sonic
Vir The Robot Boy
Hungama TV
Chorr Police
Hungama TV
AXN, HBO Hits, HBO Defined and Romedy Now show

movies as well as TV series.
Networks are now developing premium offerings to
move to a subscription based business model given
that majority of their revenues come from advertising
currently. Programming strategy on English GECs has
seen a change in order to give viewers access to content
as it airs in the United States. This was important since
English GECs were losing to online viewership and
downloads on account of delays in telecast of shows in
India. Channels such as Star World Premiere HD, HBO
Hits and HBO Defined give Indian viewers access to
American television content in high definition at nearly the
same time as it is telecast in the United States. Given the
high content costs and the current low ARPUs, industry
participants believe that premiumisation is required to
pave the way for a subscription driven revenue mix to
improve the financial viability of English entertainment
channels.
Digitisation has opened up the doors for

subscription-driven premium content, especially
in English entertainment. The customer
response to subscription-based HD channels
has been impressive. There is customer appetite
for paying subscription fees as long as there is
good quality content.
Source: Compny websites, KPMG in India analysis
Going forward, the Kids genre is likely to see more

localization and sub-segmentation of content along
the lines of age, gender and language as the benefits
of digitisation become real and channel carriage costs
come down. This genre is also ripe with opportunities
for innovation and creating additional revenue
streams through brand extensions into films, gaming,
merchandizing, licensing of characters and on-ground
events.
English entertainment
The English entertainment space, comprising of
English GECs and movie channels, has made significant
gains from Phase I and II digitisation with viewership
increasing by 4037 per cent in the 8 metros since
digitisation. Digitisation has widened the scope of English
entertainment by making quality content available across
the country. The genre enjoys premium SEC A viewership
which helps it garner a disproportionate share of television
ad revenue vis--vis its total viewership. The genre has
been traditionally over-indexed as it corners 4 per cent of
ad revenues with 1.1 per cent share of viewership.38 In
the English GEC segment, the ability to garner relevant
eyeballs and generate buzz around the show matter more
than ratings.
2013 saw a number of new channel launches in the
English entertainment genre Star Movies Action, HBO
Hits, HBO Defined, Star World Premiere and Romedy
Now. These new offerings are a manifestation of
broadcaster efforts to build niche competencies in order
to differentiate themselves in a fragmented environment.
Apart from pure English GECs, English movies channels
have also started showing English TV programming
- Monica Tata
Managing Director,
HBO India
A la carte English Entertainment

channels
Channel
Broadcaster
Subscription Price
(INR per month)
HBO Defined
HBO Asia
INR 45 for SD
INR 90 for HD
HBO Hits
HBO Asia
INR 45 for SD
INR 90 for HD
HBO Defined & HBO Hits

combo
HBO Asia
INR 79 for SD
INR 99 for HD
Star World Premiere HD
Star India
INR 60
Source: Company websites, KPMG in India analysis
37. Why English-language Channels are Growing, Business Today, Business Today, 10 November 2013
Sports
TIn terms of viewership, the Sports genres share
increased to 2.6 per cent of the total viewership in 2013,
from 2.2 per cent in 2012.39 IPL 2013 performed better
than IPL 2012 in spite of the controversies around it. MSM
is reported to have earned between INR9-10 billion40 in
the sixth edition of the league in 2013, a significant jump
from the INR7.5 billion41 in the previous year. The Sports
genre faced some heat due to sharp depreciation in the
Indian rupee as payouts for sports rights are in dollars.
The Sports genre had an eventful year in 2013 with every
major player renewing their investments in content.
Acquisitions of sports television rights continued to be
driven by cricket but rights for non-cricket sports also
picked up, primarily football. The foray was led by Star
Sports which announced an investment of INR200 billion
over the next five years to expand sports coverage in
India.42 The company phased out the ESPN channels
and underwent a rebranding exercise across its network
naming its six channels as Star Sports 1, Star Sports 2,
Star Sports 3, Star Sports 4, Star Sports HD 1 and Star

Sports HD 2. Star India paid close to INR2 billion43 to
become the sponsor for the Indian cricket team starting
1 January 2014 to 31 March 2017 and followed it up by
licensing digital distribution rights for the 2014 edition
of the IPL from Times Internet Limited. This follows
Star Indias acquisition of television and digital rights
to domestic and international cricket from the Board of
Control for Cricket in India (BCCI) until 2018 for INR38.5
billion in 2012.43 The network is also looking at developing
non-cricket sports properties such as the Indian Super
League (Football), Hockey India League and the Indian
Badminton League.42
Apart from the investments from Star India, TEN Network
acquired broadcast and production rights of cricket played
in Sri Lanka till 2020 for around USD 6044 million while
Sony Six clinched the deal to broadcast all international
events of FIFA for a period of five years including the
football world cups in 2014 and 2018.45
Key Sports events rights acquired in 2013

Sport
Cricket
Football
Others
Tournament / Fixture
Broadcaster Group
Contract Tenure
IPL Digital Distribution
Star Sports
2014
International cricket played in Sri Lanka
Ten Network
2014-2020
Pakistan v/s Sri Lanka in UAE
Sony Six
2013
India New Zealand Cricket Series (2014)
Sony Six
2014
Asia Cup
Star India
2014
FIFA World Cup
Sony Six
2014 & 2018
UEFA European Football Championship (EURO)
Sony Six
2016
FIFA World Cup Qualification
Sony Six
2014
UEFA EURO 2016 Qualification
Sony Six
2016
FIFA Confederation Cup
Star India
2013
FIFA World Cup 2018 European Qualifiers
Sony Six
2018
Australian Open
Sony Six
2015 2019
Summer Olympics Rio de Janeiro, Brazil
Star India
2016
Winter Olympics Russia
Star India
2014
Youth Olympic Games
Star India
2014
Super Fight League
Star India
2013 2017
TNA Wrestling
Sony Six
Tour De France
Ten Network
Till 2016
Source: Press releases, KPMG in India analysis
40. Slashed rates help IPL get more sponsors, Livemint.com, 16 March 2013
41. IPL ends in style, but loses sheen, Hindustan Times, 28 May 2012
42. Star to invest Rs 20,000 crore to expand sports coverage in India, Times of India,
6 November 2013
43. Sahara out as Star India gets to sponsor Indian cricket team, Livemint.com 9 December 2013
44. Ten Sports bags SLC broadcast and production rights until 2020,Islandcricket.lk, 6 July 2013
45. SONY SIX bags exclusive rights for FIFA till 2018, Indiantelevision.com, 15 January 2014
34
35
Investment in rights for Sports events is more

of a hygiene factor and all serious players
would have long term contracts for the same.
However, the need of the hour is investment
in infrastructure - equipment, studio, master
control room etc. - to enhance viewership
experience.
- Rajesh Sethi
Sports Business, ZEE
Sports broadcasters are increasingly focusing on

developing a regional play to expand their audience base.
After Hindi, Star Sports is reportedly planning to launch
regional sports channels for the Marathi, Bengali and
Tamil market. MSM has had a Hindi feed for the IPL and
Ten Sports ran a parallel Hindi feed for India-South Africa
Cricket Series and the Junior Hockey World Cup in 2013.
Sports broadcasters expect regional consumption and
non-cricket properties to drive the next phase of growth in
the Indian sports genre.
Music
The Music genre occupied a 3.646 per cent viewership
share in CS 4+ All India and a 7.247 per cent share in CS
15-24 ABC HSM in 2013. The genre was given a jolt
with TRAIs 12 minute ad cap regulation given its strong
dependence on ad revenues and an existing ad inventory
of ~20 minutes per hour. Music channels are actively
involved in the legal challenge to TRAIs 12 minute ad cap
regulation order and have obtained a temporary reprieve
from the Delhi High Court. Industry discussions revealed
that ad rates largely remained flat for all major channels.
The Music genre has benefitted from digitisation
with increased shelf space for music channels driving
penetration in untapped markets. Regional and youth
music consumption have emerged as attractive avenues

for players in the genre. Channels are attempting to create
an identity for themselves through innovation in content
and packaging and enhanced consumer engagement
via digital media in order to break free from the cluttered
music space. MTVs Unplugged, Coke Studio and
Soundtrippin, Mastiiis Golden Era with Annu Kapoor,
Sony Mixs Mix Solos and Mix Voices, and MTunes
MOriginals and Off The Record are some notable
examples of music channels endeavour to develop niche
and differentiated music offerings for consumers.47
In my view, the genre of Music and Youth

channels are two separate entities and are not
an either/or option. Music in India, unlike in
other parts of the world, is largely an offshoot
of cinema. As long as cinema in India thrives,
music which is a microcosm of the movies that
they represent will always be popular. Add to it
the popularity of TV as an entertainment medium
in India, and you have the case for Music on TV.
From a profitability perspective too, pure play
music channels are certainly more attractive.
While youth channels may provide additional
stickiness on account of continuity of storylines
and/or themes, the newness of music on regular
basis (linked to movie releases) provides the
impetus to keep watching music on television.
- Pradeep Guha
Managing Director,
9XM Media Private Limited
Given that most of the music channels are FTA, the

outcome in the 12 minute ad-cap petition will be critical
for the Music genre in 2014. Industry also expects to
benefit from Phases III & IV of digitisation through
increased reach and reduction in carriage fees.
47. 2013: Music channels hunt for the right formula, Televisionpost.com, 31 December 2013
Lifestyle and Infotainment

With a viewership share of 1.2 per cent, the Lifestyle
genre accounted for 2 per cent of the advertisement
revenue in 2013.48 This genre continues to evolve with
increasing focus on localisation and regionalisation of
content, repositioning of offerings and a more pronounced
role of food-related content in channel content mix.
Food content on Lifestyle channels has been

increasing and more than 50 per cent of Lifestyle
category is now dominated by Food. Even GECs
are trying to capitalise on the interest in the Food
segment through shows such as Masterchef on
Star Plus and Kitchen Khiladi on Sony.
- S K Barua
FoodFood
NDTV Good Times underwent a rebranding exercise to

develop a youth-centric play. The channel changed its
tagline from Live the Good Times to Live Young. The
channel is also extensively using social media to develop
a better connect with its audience and has segmented its
shows into bands such as style, food, travel and reality
at specific time slots. FoodFood underwent a rebranding
exercise as well changing its tagline from Khushi ke
recipe to Its sizzling as it added lifestyle elements
such as leisure, travel and healthy cooking to its food
centric programming. TLC carried forward its content
focus launching 25 new shows in 2013 including original
productions like Style Inc. with Aalim Hakim, Ravinders
Kitchen and Trinny and Susannahs Makeover Mission
India. This genres advertisement revenues came under
pressure like the rest of the industry due to economic
slowdown. Cost of carriage has come down but industry
expects further reduction. Digitisation has benefited this
genre and are hopeful of a boost in subscription revenues
as the digital eco system gets entrenched further.
Content production
The TV content production industry in India is estimated
to be INR 20-2549 billion in size. However, it is extremely
fragmented with ~6,00049 producers in the fray and
most producers producing only one or two shows at a
time. Given the highly creative nature of the industry, the
barriers to entry are extremely low and this is unlikely to
change any time soon. Only a few production houses such
as Balaji Telefilms, Endemol, Big Synergy and Fremantle
have managed to break into the INR1 billion club of
content producers while other such as Sphere Origins,
Optimystix and Contiloe Films are in the INR0.4-1 billion
range.49
Increasing number of original programming

hours
As Hindi GECs vie for highest overall weekly rating points
they are increasing their original programming hours. The
12 minute ad cap is also expected to lead to an increase
in fresh programming since ad inventory per hour is fixed
and the only way for channels to increase ad volumes is
by adding more hours of original content.
Going further we expect more increase in

programming hours in the Hindi GEC space.
Prime time now starts at 6pm instead of 7pm
on Star Plus and other Hindi GECs are also
expected to follow suit by the end of 2014.
Afternoon programming hours are also making
a comeback. Even other genres are seeing
an increase in programming with Channel V
showing fiction shows and Kids genre channels
such as Pogo and Disney starting non-animation
shows.
- Sunjoy Waddhwa
Chairman and Managing Director,
Sphereorigins Multivision Private Limited
36
37
Increasing production costs and higher

investment in quality
Cable digitisation is expected to create significant
opportunities for content providers, including:
Existing channels investing in more content, and
upgrading content quality.
Narrower targeted offerings to segments which are
currently under-served by one size fits all offerings,
which will require more localised content.
Launch of new premium channels that may see a viable
business case on the back of reduced carriage fees and
customer appetite for paying premium ARPU for quality
content.
The increase in programming costs is not just

inflation linked but also linked to improvement
in production quality and high competitive
intensity.
- Jay Sampat
Group Strategy Head,
Balaji Telefilms
Content producers believe that content is underinvested currently but with the expected digitisation-led
improvement in economics, investment in content will
grow. This is true for the regional space too, especially in
South India.
The regional language TV industry is undergoing

a major transformation. Today channels are
willing to invest around INR0.5-1 million or even
more per 1 hour episode for non-fiction shows
on South Indian language channels. Though
this is still lower than non-fiction content costs
in HSM, this shows that players are willing to
invest in programs with high production quality.
- Abhishek Rege
Chief Operating Officer TV Business,
Endemol India
Owning IP rights to lead to scaling up

A majority of the TV programmes produced in India are
commissioned, which means that the IP rights for the
content and the characters remain with the broadcaster.
Increasingly, content producers are recognising the
need for owning IP rights for content so as to be able
to monetise it better through i) licensing content and
formats in international markets, ii) dubbed or remade
versions on regional language channels, iii) digital media.
This would lead to TV content producers scaling up since
they can then create formats that can be exported to
international markets.
India is one of the biggest TV markets in the

world. While there is consolidation in the
broadcast industry (Zee, Star, Sony, Sun, Viacom
etc.) and the distribution business, the content
industry is extremely fragmented with only few
players like Balaji Telefilms having many shows
airing at the same time. Of the programming
created, majority is commissioned and every
major broadcaster in the Hindi space owns the
IP rights; as opposed to the film industry where
Balaji owns the IP of every film we make. This
is indeed a big deterrent, as not owning IP does
not allow us as content providers to get the
maximum monetization for our creativity. Being
pioneers in the industry we are working on
various models where we can retain IP so that
we can have better multi-platform monetization
going forward. Ownership of IP is a critical
requirement for the fragmented content industry
to scale up. It will also create an environment
where Indian formats and dramas can travel the
world.
- Shobha Kapoor
Managing Director,
Balaji Telefilms Limited
Stars moving from silver screen to TV

A number of film stars debuted on the small screen.
Anil Kapoor was the star of this transition by making
his debut in a remake of the international series 24.
With the popularity of the series, Anil Kapoor raised
the bar for film actors trying to make their way into the
small screen. Bollywood actors Anupam Kher, Shabana
Azmi, Rahul Khanna and Richa Chhada also had cameo
performances in the show. Veteran actor Poonam Dhillon
made her comeback to the small screen in a daily soap,
Ek Nayi Pehchaan.50 Salman Khan has continued to host
the Bigg Boss series, Amitabh Bachchan returned with
Kaun Banega Crorepati, while Aamir Khan will return
to host Satyameva Jayate in 2014. Other movie actors
such as Shilpa Shirodkar in the serial Ek Mutthi Asmaan,
Ruslaan Mumtaz in Jee Le Zara, Rahul Dev in Devon Ke
Dev Mahadev made their debuts on the small screen in
2013.51
2014 is expected to see Kajol working in a crime show
directed by Rensil DSilva and Amitabh Bachchan roped in
for Anurag Kashyaps TV show focusing on social issues.52
This trend of movie stars making the transition to the
small screen is likely to add to the content production
costs for channels.
50. 2013: Bollywood stars made small screen glitter, The Economic Times, 29 December 2013,
51. From Anil Kapoor to Rahul Dev: Film Stars debuting on TV in 2013, DNA India, 30 December 2013
52. Is TV a 2nd innings for Bollywood stars, The Times of India, 3 December 2013
Other Themes in 2014 and

going forward
The TRAI regulations over channel aggregators

will help the MSOs reduce the burden on
subscribers. Currently MSOs are compelled to
carry unwanted channels which are bundled
together. In the existing scenario, a Telugu
language channel of one broadcaster can be
bundled with a Kannada channel of another
broadcaster which does not make sense from
the customers perspective.
Disaggregation of broadcasters
Over the past two years, the TV industry had witnessed
a trend of broadcasters coming together to consolidate
their distribution functions, to improve bargaining
power with MSOs and DTH operators for negotiating
subscription revenue deals and carriage costs. This
had led to MSOs and DTH operators complaining of
cartelization from major Indian broadcasters and having to
pay for weaker channels that were being bundled together
with the stronger channels by the aggregators.
- Sankaranarayana G
President and Chief Operating Officer,
Asianet Satellite Communications Limited
Number of most popular channels

as per GRP (2013)
Top 5 Top 10 Top 20 Top 50
Channel
aggregator
Stakeholders
No. of
Broadcasters
Pay TV
channels
% of total
pay TV
channels
Channels
owned by
stakeholders
% of total
channels by
stakeholders
MediaPro
Star-Den and
Zee-Turner
15
76
32%
69
91%
10
21
IndiaCast
TV18, Viacom18,
Disney India
36
15%
24
67%
11
TheOne
Alliance
Multi Screen
Media and
Discovery
12
28
12%
19
68%
Source: TRAI - The Telecommunication (Broadcasting And Cable) Services (Second) Tariff (Tenth Amendment) Order 2014, 10 February 2014, KPMG in India analysis
In response to this, in January 2014, TRAI made changes

to the regulatory framework that governs the relationship
between broadcasters and Distribution Platform
Owners (DPOs) such as MSOs and DTH operators. As
per the changes, while broadcasters can continue to
use channel aggregators as agents, only broadcasters
can publish the reference interconnect offers (RIOs)
and enter into interconnection agreements with DPOs.
Most importantly, broadcasters should ensure that their
authorised agent does not alter the bouquets as offered in
the RIO of the broadcaster and in case an agent acts as an
authorised agent of multiple broadcasters, the individual
broadcasters shall ensure that such agent does not bundle
its channels or bouquets with that of other broadcasters.
However, broadcaster companies belonging to the same
group can bundle their channels. A timeframe of six
months has been set for the broadcasters to amend their
RIOs, enter into new interconnection agreements and file
the amended RIOs and interconnection agreements with
TRAI.
While it is still too early to assess the full impact of TRAIs
effort to dilute the power of the channel aggregators, as
per initial reactions, even if the channel aggregators can
continue to act as agents, their bargaining power will be
heavily curtailed since they cannot bundle channels of two
different broadcasters.
Smaller broadcasters with fewer channels are expected

to be affected more from this move, rather than the
larger broadcasters with a large bouquet of channels.
Smaller players will now have to set up their own
distribution teams that will add to their cost base. Also,
the negotiating power of smaller players will be reduced
since their channels cannot be bundled with those of
other broadcasters, tilting the balance of power back to
the MSOs and DTH operators.
38
39
Evolution of TV measurement
2013 has been an eventful year on the ratings front.
Several broadcasters were unhappy with the fluctuations
in TV rating points post the addition of LC1 markets, with
ratings dropping for some large broadcasters. Many
broadcasters discontinued their TAM subscriptions in the
middle of the year and the issue was settled only after
TAM switched from TVRs to TVTs that would show growth
in audiences in absolute numbers.
The broadcasting and advertising industries have long
been vocal about the need for more competition in the
television ratings measurement service in India. With
this objective, BARC was initially registered in July 2010,
and was launched in March 2013. BARC is a joint body of
advertisers and broadcasters with three shareholders
IBF, AAAI and ISA. IBF holds 60 per cent in the JV, with
the balance 40 per cent equity being shared by AAAI and
ISA. BARC has been formed on similar lines as BARB
(Broadcast Audience Research Board) that compiles
audience measurement and television ratings in the
U.K. The broadcasting industry has in the past indicated
that transparency is a key pillar for BARC, and the latter
is looking to segregate the functions of data collection,
analysis and reporting between three independent
agencies.
BARC has selected Mdiamtrie, a French audience
measurement company as its ratings partner after
evaluating multiple bids.53 Mdiamtrie, as a part of the
six year arrangement, will provide technological knowhow and licenses to BARC to use it TV metering system
already in use in three markets France, Netherlands
and Morocco and assist BARC in metering hardware
procurement. The new ratings system expected to be
in place by October 2014, will begin by servicing 20,000
panels compared to the existing 9,600 provided by TAM
and would gradually increase the panel size to 50,000.53
This is in line with TRAI television rating guidelines cleared
by the Cabinet that stipulate a television ratings provider
ought to have at least 20,000 panels and must increase
the panel size by 10,000 every year to eventually reach
50,000.53
As the industry awaits the operationalisation of the new
system, it also faces the prospect of a TV ratings blackout.
As per the guidelines for television rating agencies
issued on 16 January, 2014, no legal entity either directly
or through its associates is allowed to have substantial
equity i.e. 10 per cent or more of paid up equity in both
broadcasters/advertisers/advertising agencies and rating

agencies.53 TAM Media Research, the sole provider of
television audience measurement in India and a joint
venture between Kantar Market Research and Nielsen
(India) Private Ltd stood disqualified as per this criteria.
Kantar Market Research filed an appeal with the Delhi
High Court to get a stay order on these guidelines
or an extension of deadline to comply with the new
shareholding norms. The Delhi High Court has provided
some respite to Kantar by extending the deadline by 15
days to comply with the guidelines that include increasing
panel size to 20,000 and staying the contentious crossholding norms. The Court is expected to hear the matter
again on 6 March 2014. Industry discussions indicate that,
if as a result of the regulations, TV ratings are not available
for a few months it will not significantly impact the market
leaders in each genre. Advertisers will continue to depend
on the background and history of ratings. However, any
TV ratings not being available for a longer period is likely to
impact TV advertising revenue spend.
TRAIs guidelines on TV rating agencies were

along expected lines. However, any ratings
blackout for a prolonged period of time is
detrimental to the industry. BARC has released
RFPs for technology and research to global
vendors and is on track to start operations from
1 October 2014.
- Punit Goenka
Zee Entertainment Enterprises Limited and
Chairman, BARC
Looking ahead, the TV measurement systems will have to

evolve to include capabilities such as, i) measurement of
the impact of deferred viewing (catch up TV), ii) viewership
measurement across multiple media as consumption of
TV content across platforms rise, iii) integrating social
media engagement into audience measurement.
53. BARC to roll out new system from October, Business Standard, 21 January 2014
The Emerging TV Ratings Scenario

BARCs plans and progress
BARC expects the new system to be commercially available later
this year. The major operating blocks are in place. Recruiting,
training and activating panel homes is a large and time-consuming
effort. This exercise will unfold soon and is expected to be complete
in good time for a late summer launch.
RFPs issued to technology and research partners: The

first major contract that BARC needed to award was for the
Establishment Study. This became moot when BARC decided
to repurpose the Indian Readership Survey for this purpose.
This also ensured that there would continue to be only one
reference study for determining audience segmentation. The
second and third RFPs were issued for System Technology and
Panel Management. Mdiamtrie of France won the Technology
mandate. Panel Management proposals are currently under
evaluation. BARC has also issued RFPs for Design, Quality
and Analytics and Playout Monitoring. Proposals are being
evaluated and awards will be announced in due course.
No. of meters planned: Planning is more centered on the
number of homes to be metered and the number of meters
deployed is a derived number. BARC plans to start by metering
20,000 homes in the first stage. After this, 10,000 homes will be
added each year until the panel reaches 50,000 homes. At this
time, less than 5 per cent of all homes are multi-TV. BARC may
require up to 21,000 metering devices to meter the initial panel.
Measurement technology: The current meters are based on
audio matching. In the new system, each channel that wishes to
be metered adds a special audio encoder that inserts a unique
ultrasound code into the audio track. This signal is inaudible
to human ears as it lies in a frequency range beyond 20 kHz.
The signal continually embeds channel identification and a
timestamp into the audio track. This signal can be retrieved by
a metering device. Coupled with information about who was
watching, BARC gets complete information about what was
watched, when and by whom. If the same content is being
simulcast by more than one channel, the legacy, audio matching
technology is unable to determine source. This problem is
eliminated in encoding. In addition, the embedded code survives
even if content was not viewed live, or was viewed on a device
other than the conventional TV. This ensures that time- and
device-shifting can be accurately tracked. As consumption
moves to computers, smartphones and tablets, this capability
will be critical in ensuring accurate measurement of reach and
viewership.
Switch from TVRs to TVTs

The switch from TV rating points to TVTs is a very important step
taken by the industry in 2013. While TVRs and TVTs are equivalent
in mature, unlike stable markets in the West, the Indian television
footprint continues to add millions of new homes every year. By
implication, the audience volume represented by 1 TVR increases
each year. When KBC Season 3 with Shahrukh Khan as host started
airing in 2007, many commentators assessed it less popular than
the first season featuring Amitabh Bachchan as the TVRs were
lower. This was a wildly incorrect assessment as the underlying
audience had grown sizably over the period and KBC 3 actually
enjoyed much larger audiences than the previous seasons had.
However, the unfair and inaccurate criticism carried the day as we
were trapped in relative rather than absolute measures. Contrast

this with the US where ratings are always reported in absolute
numbers. Super Bowl, the finals match of the US NFL, is Americas
most watched television event every year. The 2 February 2014
finals this year set a new record of 112.2 million viewers, not x
TVRs.
Media planners will be most reluctant to accept the shift to TVTs
as it makes it very easy for broadcasters to argue for year-on-year
price increases to reflect audience growth. However, this resistance
is unsustainable given that the entire reporting mechanism is
decisively shifting to absolute measures of audience from relative
measures of audience. Given that the audience measure has
changed, it will become harder and harder to defend and insist on
pricing on the relative measure. There will be plenty of resistance,
for sure, but this is only to be expected.
Regulation on rating agencies:
The regulations, it must be emphasised, are issued by Ministry of
Information & Broadcasting, albeit based upon recommendations
of the TRAI. It is reported that the incumbent agency has recently
applied for registration with the Ministry. The legal challenge by
one of the incumbent agencys parents is still pending in Court and
as a matter sub judice, more speculation about the regulations is
inappropriate.
Ratings blackout as a result of TRAIs regulations appears to be a
matter of great worry for many commentators from the advertising
value chain. It is very important that the transformational exercise
being undertaken by the JIC created specially to administer
television audience measurement, BARC, be allowed to run its
course. This is truly a once-in-a-generation undertaking and
impatience will be counterproductive. Anxiety about a ratings dark
hiatus will, in hindsight, prove misplaced as the new system will
more than justify the time, effort (and heartbreak) that went into
establishing it.
Evolution of rating points in the future:
The main evolution over the next three years is going to be
wider and deeper coverage of the fast expanding audience for
conventional television. Looking beyond, it become clear that
audiences consuming content on alternative, personal devices will
continue to grow by double-digit percentages and even pure-play
online content will attract such sizable audiences that it will
demand agnostic measurement. PCs, Smartphones and Tablets will
be the new frontiers for measurement and we will shift to thinking
measurement of audiovisual (AV) content rather than television (TV)
content.
Paritosh Joshi
Member - TechComm, BARC and
Principal, Provocateur Advisory
Unless otherwise noted, all information included in this column/ article was provided by Paritosh
Joshi. The views and opinions expressed herein are those of the authors and do not necessarily
40
41
Online viewing of TV content

Consumption of TV content on screens other than the
television, such as PCs, mobile phones and tablets is
a growing phenomenon. Online video viewership has
witnessed significant traction in India, with 6054 million
people having watched online videos on their PCs,
a growth of 1654 per cent between December 2012
and December 2013, indicating the growth potential
for online viewership of TV in India. Further growth in
online consumption of TV content is dependent on
developments across different aspects of the ecosystem
content, platforms, devices, data services and payment
mechanisms.
Broadcasters are looking at various options to make their
content available to users on multiple screens, including
YouTube. YouTube accounts for 58 per cent of online video
viewership in India and the YouTube channels by the top
4 Hindi GECs starplus, colors tv, zeetv and setindia
are among the top 10 YouTube channels in India.54 Most
channels seem to be focused on making available existing
long format TV content for online viewership. However,
re-purposing TV content as short format videos, suitable
for watching on wireless connections on smaller screens
is expected to be the way forward.
Cross platform distribution is the way forward

for the sector. For content owned by channels,
there is an opportunity to exploit the vast content
library by way of selling the raw footage in terms
of one minute videos or stills taken of locations
etc. The price range for such content is expected
to be derived from international standards.
- Smeeta Chakrabarti
Chief Executive Officer - NDTV Lifestyle &
Head of Operations - NDTV News
Players across the value chain are attempting to capitalise

on consumer demand for watching TV content anywhere,
anytime. Multi-screen platform launches by broadcasters
such as Sony LIV from MSM India, Ditto TV from Zee
Entertainment and Star Player from Star India, has been
followed by launch of online/mobile platforms by DTH
operators in 2013. Both Tata Sky and Dish TV launched,
mobile and tablet apps through which subscribers could
watch live TV, catch up TV and video on demand (VoD)
for an additional monthly fee. Independent VoD services
such as Apalya, Geodesic, Zenga, DigiVive (nexGTV) and
Spuul continue to see traction but are yet to see any
significant amount of paid user base.55 There is also an
increasing trend of platform owners tying up with device
manufacturers to increase the chance of users logging
in if the app is already pre-embedded on the device.
Favourable trends in device affordability, increasing screen
sizes of mobile phones and adoption of tablets continue
to make online viewership of TV content more attractive.
54. Comscore, December 2013

Multi-screen platforms by DTH operators

DTH
operator
Availbility
Pricing
Dish TV
Available on Android & iOS

devices via mobile app for
Dish TV subscribers
Additional fee of INR 69

(Jumbo pack) or INR 29
(Starter pack) per month
Tata Sky
Available on Android & iOS

devices via mobile app for
Tata Sky subscribers
Additional fee of INR 60

per month
Source: Company websites, KPMG in India analysis
As content availability and technology platforms improve,

online distribution could be a key revenue generator
for the TV industry. In the short term, monetisation is
expected largely through advertising, since availability
of cheap content on C&S platforms is a challenge for
monetisation via subscription. Given the low prices for
C&S TV and the high cost of bandwidth, providing online
TV at competitive price points would be difficult for mass
adoption. However, for premium and exclusive content
subscription revenues can be a big driver.
The ads on digital screens are more targetted

and based on user engagement, when compared
to those on the TV screen. Advertising on new
media platforms are not expected to take share
away from TV advertising. Instead, expect new
media platforms to grow the ad pie.
- Nitesh Kripalani
Executive Vice-President: New Media, Business
Development & Digital/Syndication,
Challenges for mass adoption of online TV viewing

While platforms and content owners are gearing up for
uptick in online TV viewing, broadband availability remains
a challenge for large scale adoption of online distribution
of TV. Even though accessing content on-the-go is
becoming affordable as mobile companies cut prices
of wireless data services, speed and coverage of data
services continue to be constraints especially for long
The only thing holding back Digital media is the

data speeds and coverage, in spite of which
online and mobile viewership has shown
impressive growth. On digital media, unique and
exclusive content will always get value, while
me-too content will not. There is tremendous
scope for sports viewership online, given its
exclusive nature. However, for monetisation
beyond advertising on digital media to pick up,
payment mechanisms and piracy issues needs
to be resolved.
- Uday Shankar
format TV video content. Launch of the much-awaited

4G services is expected to provide the impetus to online
TV viewing. Online TV viewing in India is expected to be
mobile-driven in India and skip a couple of steps in the
evolution compared to more developed markets.
Skepticism from content owners to license digital rights,
piracy and lack of clarity on revenue sharing arrangement
are other challenges.
The range of entertainment available for

viewers to consume through pirated means on
the internet is enormous and rapidly growing.
Facilitating technology and pirate business
models are evolving at a rapid pace. There are
unavoidable leakages and hence continuous
protection and safeguard mechanisms are one
of the keys for successful IPR Management.
MSM has been actively combating with piracy
for the last 3 years. We could not find any
quantitative and qualitative criteria to measure
impact on viewership and revenues by taking
down more than 25,000 hours of content until
date.
- Ritesh Khosla
Vice President Legal,
42
43
Multi-screen engagement
In a scenario of heightened competition, broadcasters are
beginning to depend on the other screens (PC, tablet,
mobile) to increase viewer engagement and stickiness.
Across the board, be it GECs, Kids, Music, News or
Lifestyle genres, broadcasters seem to be keen on using
the online platform for better engagement with their
audiences. While multi-screen engagement is still at a
nascent stage in India broadcasters and advertisers are
both trying to capitalise on this growing phenomenon.
Reality shows with television contests are leading this
digital engagement. While earlier, television contests
and voting was largely via dial-ins and messages, now
most shows provide the option to log on to the channels
website or vote through a mobile app. Channels have
also started show-specific websites, where users can
participate in contests, watch episodes in part or full, find
information on the participants and watch behind-thescreen action.
Over the past couple of years, broadcasters have started
using social media platforms as well to increase visibility
and viewership. Facebook fan pages and Twitter handles
for popular channels, shows and characters have become
the norm. The next big thing is social TV where channels
encourage viewers to converse on social media about the
television programmes they are watching as it helps in
pulling in new viewers and makes TV viewing a real-time
group experience. Advertisers are also supportive of this
growing trend since, social TV can offer better insights,
help in campaign optimization and improve effectiveness
of ad purchases. In the US, Twitter, Facebook and Google
are all vying for each other to capture a share of the social
TV market. For instance, Twitter has launched Twitter
Amplify, a programme designed to help brands sync up
television ads and promoted tweets. Twitter has tied
up with several broadcasters for the same and helps
amplify social TV conversation with real-time, dual-screen
sponsorships and in-tweet video clips from broadcasters.
Given the 15-34 year old target group for music

channels, we believe building an aggressive
second screen experience something is one
of the key differentiators. In addition , social
media engagement and not just presence would
help channels to build a Tribe of their own in the
music space.
- Punit Pandey
Executive Vice President & Business Head,
9XM Media Private Limited
Going forward, social media is also expected to become

a fundamental part of how TV shows are measured.
For instance, Nielsen has launched a twitter-based TV
measurement system in the US to capitalize on the 2-way
causal influence between TV viewership for a programme
and the conversation around that programme.56
56. Nielsen Starts Measuring Twitter TV Ratings, Mashable.com, 7 October 2013
International revenues to be driven by

advertising and content syndication
While subscription revenue growth has been the
mainstay of international revenue growth for Indian
broadcasters in the past, advertising revenue is expected
to be the main driver going forward, in contrast to the
trend in domestic revenue mix. Content syndication in
international markets is also emerging as a key revenue
stream for Indian broadcasters. While a large part of the
international market is for Hindi content, there is sufficient
scope for Indian regional language content too in
international markets, especially South Indian languages.
In the past, international subscription revenue growth for
Indian channels was driven by signing multiple deals with
different distribution platform players in a single market.
However, subscription revenue growth for Indian channels
in several international markets such as US, Canada and
Europe has matured. Newer markets such as Middle East
and Africa are driving growth in international subscription
revenues. Subscription ARPUs vary from market to
market, but the premium charged in international markets
is quite significant. As per industry discussions, Indian
channels earn USD1.5-12 per subscriber, depending on
the channel and the country.
Going forward, a larger part of the revenue growth would
be driven by reaching out to the local audience in each
of these countries. Since the non-Indian audience in
these markets, can not be expected to pay a premium
subscription ARPU, Indian channels are now looking at
expanding business through the ad route by going FTA
to attract local audience. Channels are looking at both
adding sub-titles and dubbing for localising the content.
However, Indian content does not lend itself easily to
localisation and adaptation to local context would require
understanding of local culture.
Localisation in international markets is tricky

as Indian content is not easily transferable to
international markets. Entertainment requires
understanding of culture and innovation in
content to work. Adaptation of the Indian content
to local context is much more difficult than in the
case of an FMCG product, for instance.
- Sunil Lulla
President - Corporate Development,
Bennett, Coleman & Co Limited
Premium channels offering niche content

Industry movement towards subscription-driven niche
channels picked up pace in 2013 with some broadcasters
beginning to offer differentiated content catering to subsegments within their target audiences. While digitisation
support for subscription-driven business models is still
some time away, a few broadcasters have already taken
the lead in launching advertisement free, subscription
driven, premium channels. Many of these channels are
available only on digital platforms and have shown good
traction in subscription. However, overall investment in
niche and high quality content remains low.
While benefits of digitisation in the form of

increased subscription revenues and lower
carriage costs is expected to come in over the
next 2-3 years, broadcasters of non-mainstream
channels have already seen positive impact
from digitisation in the form of higher viewership
leading to better advertising revenue growth.
- Nikhil Gandhi
Vice President - Revenue, Media Networks,
Disney India
While there is consumer demand for niche content, lack

of monetisation and profitability has resulted in limited
investment. Our discussions with industry participants
indicate that the cap on ARPUs in the digital system
and the 12 minute ad cap put together do not create a
good environment for niche channels to thrive. Also, the
current system of TV ratings is not able to capture niche
channel viewership adequately. Industry discussions
indicate that until measurement evolves to truly reflect
the viewership of niche content and digitisation results in
support for subscription-led business models, it is difficult
to monetise this viewership which in turn has led to lower
profitability and lower investment in niche content.
While digitisation has surely led to a substantial

subscription revenue uptake, the viability of
niche genres on TV is still at least a couple of
years away, give the carriage fees imperatives,
delay in pass through of digitisation benefits
to broadcasters and insufficient ratings
representation.
- Achint Setia
Head - Corporate Strategy & Business
Development, Viacom18 Media Private Limited
Even as Indian TV industry is catching up on the HD

bandwagon, international markets are already looking
ahead to 4K Ultra HD (4K) content,which has four times
the picture resolution of 1080p Full HD content. 57 4K
content and delivery platforms are expected to gain
traction in international markets in 2014.
57. Ultra HD and 4K TV: Everything you need to know, Techradar.com, 11 February 2014
44
45
Industry wish-list
TRAI has completed a decade of media
regulation but has a long way to go on creating
a level playing field for independent media
companies. Content disaggregation is a
welcome first step. It needs more powers to
enforce its diktats.
- Ashok Mansukhani
Whole Time Director,
Hinduja Ventures Limited
Entity
Wish-list
MSOs
Incentives and
support from the
Government
Rationalise taxes
Comment
Providing infrastructure status to the cable industry will enable easier MSO access to domestic funding critical for
successive phases of digitisation.
Custom duty on set top boxes has been doubled to 10 per cent. MSOs indicate that has been done in order to
provide a boost to the indigenous manufacturers.
MSOs prefer that instead of MSOs subsidising the subscriber for the increase in STB cost, government provide
these local manufacturers incentives and subsidies to enable them to be more cost-competitive vis--vis imported
boxes.
Reduction in custom duty on digital head-end equipment and STBs will provide a boost to the digitisation initiative.
The DTH industry is subject to multiple taxes. The tax levies on DTH industry includes an average of 10 per cent
entertainment tax, 10 per cent in license fees, and an additional 10 per cent customs duty on set-top-boxes.
Rationalization of taxes is expected to provide a boost to the industry enabling providers to invest in infrastructure
development and subscriber acquisition.
Though improving ARPU and increasing scale has led to an improvement

in economics for most DTH operators, DTH industry has been around for
more than 10 years with not a single player making bottom line profits. It is
high time government takes care of issues around parity with digital cable
and high rate of taxation.
- Rohit Jain
Deputy Chief Executive Officer, Videocon DTH
Timely access to
transponder space
Timely access to transponder space has been cited as a key concern.
Allowing DTH operators to buy transponder space in the open market will enable faster access to transponder
space and eliminate capacity constraints.
Reduction/
removal of
customs duty on
set to boxes
Approximately 95 per cent of customer-end equipment (STB and antennae) are imported.
DTH providers would also like to see a reduction in custom duty on digital head-end equipment and STBs.
Entity
Wish-list
Broadcasters
Delayed
implementation of
12 minute ad cap
Comment
The 12 minute ad cap should be implemented only after subscription revenues from digitisation started
accruing.
The ad cap for genres such as News and Sports has to be different from that of GECs. Also the ad cap for FreeTo-Air and Pay channels should be different.
Though the cap on advertising minutes is in theory good for the

broadcasting industry in the long term from the perspective of quality
control, the cap needs to get implemented only once the benefits of
digitization start to come in. Also the cap on advertising minutes has to be
different for FTA and pay channels.
- Gulab Makhija
Independent News Service Private Limited (India TV)
Remove cap on
channel prices
TRAI expects broadcasters to declare the retail prices of their channels and broadcasters are allowed a
maximum annual increase in retail pricing, which is linked to the inflation index.
Also, while increase in retail pricing has been theoretically cleared, the regulator has so far approved such hike
only twice so far and the third increment has been pending with the regulator.
Cap on wholesale prices in the digital system and an incomplete

implementation of digitization leads to inefficiencies in monetization
for broadcasters & platforms. Pricing should be market driven while
discounts and bundling should be regulated, to give the power of choice
truly to the end consumer. KYC, CAF, a robust Subscriber management
system will bring in transparency, fair revenue sharing, and growth of the
TV industry.
- Asheesh Chatterjee
Chief Financial Officer, Reliance Broadcast Network Limited
Mandate Cost Per

Subscriber (CPS)
In the DAS regime, the government has regulated the revenue share between LCOs and MSOs but not
mandated CPS. The government needs to be stricter with MSOs to implement the CPS like DTH operators.
MSOs have shown good performance in rollout of STBs. However, there

should be a level playing field between Digital Cable & DTH. Going
forward, CPS (cost per subscriber) should become the currency for the
TV industry as CPS deals are critical for subscription revenues to grow for
the broadcasters & Digital Platforms.
- Gurjeev Singh Kapoor
Chief Operating Officer, Media Pro Enterprise India Private Limited
46
47
Entity
Wish-list
MSOs
Allow bundling
of channels by
aggregators
Comment
Channel aggregators should be allowed to bundle channels of multiple broadcasters together, at least till the
benefits of digitisation start flowing to the broadcasters in the form of higher revenue share.
While there is a must provide clause for broadcasters, there is no must carry clause for distribution platform owners.
If TRAI wants to restrict ad inventory, it should also look at other

aspects of the broadcaster business model. There is a perception that
channel aggregators may now have less power to negotiate for higher
subscription revenues and bring down carriage fees. TRAI had earlier
promised to intervene if carriage fees were unreasonable, and had
once indicated that a reasonable level would be INR0.5 per subscriber
per channel per year. In actual fact, carriage fees are ten times that
level, and this is an area where TRAI needs to act.
- Vikramaditya Chandra
Group CEO & Executive Director,
NDTV Limited
Improvement in
TV viewership
measurement
Stability in TV ratings and a holistic measurement system that allows for tracking the performance of niche
channels as well.
Acceptance of CPT metric instead of the CPRP metric to arrive at advertisement rates is critical since a CPT
metric based system better represents the new C&S households added every year.
Post digitisation and the panel expansion into the LC1 towns the ratings
have just not stabilised with major fluctuations seen week after week.
The GEC genre saw a 20 per cent drop in its overall share, the English
movie genre saw a huge increase initially and then a sudden drop,
Cricket ratings have seen a huge drop over the last one year. With
increased coverage the sample size seems to be small leading it to be
instable. The industry is waiting for BARC to happen soon as with the
panel size of 20,000 meters from the beginning and with a new robust
technology we should get more accurate ratings.
- Rohit Gupta
President - Network Sales, Licensing & Telephony,
Content
producers
Issue licenses to
new channels
The MIB should approve new channel launches. There are more than 20058 channels pending for approvals at
the MIB.
Higher investment
in content
As digitisation progresses further, content producers would like see higher investment in content.
Limited availability of quality personnel across the value chain constrains the ability of the television industry
to innovate and create disruptive strategies for rapid growth.
Ownership of IP
rights
Content producers want to own the IP rights of programs so that they can monetise the content better,
especially on online platforms and international markets.
Also owning IP rights would create enough entry barriers, leading to consolidation in a fragmented industry.
TV content production industry is heavily fragmented today. Currently

there are no entry barriers. IP rights and access to key talents can
create those barriers. If TV production houses wish to retain IP, they
may have to share the business risk.
- Indranil Chakraborty
Chief Operating Officer, BIG Synergy Media Limited
58. MIB slows down licensing TV channels, Cable Quest, 5 December, 2013
Digital Transformation in Broadcasting

The broadcast industry continues to undergo major transformations.
Digitization may mean more avenues to reach and engage the
consumer be it traditional or new media. Notwithstanding, the
fundamental economic forecast of Broadcasters worldwide remains
one of flat revenues and growing costs. India will be no exception
to this, as Broadcasters like enterprises in other sectors have to
embrace technology for driving outcomes like greater efficiencies,
lower cost of operations and new revenues. With content becoming
digital files, one of the default choices of technology for Broadcast
industry has been Media Asset Management (MAM) to help store
and manage the digital content. MAMs are like what database
management was to digitized information two decades ago.
Learning from technology evolution and adoption in other sectors,
it is imperative that MAM is only an essential start. Just as the
world of enterprise applications came into being helping digital
transformations, M&E sector is waiting for a similar technology
revolution.
Over the last decade, the Indian Broadcast industry has grown
in scale with new channel launches and enhanced digital
distribution. With the increase in the number of channels (GEC
and niche genre specific channels alike), the scale of business
operations has grown manifold. To get a sense on the scale,
national networks like Zee and Star produce between 9,000 to
12,000 hours of fresh content each, every year, which is about 3
to 4 times what the entire film industry in India produces in a year.
Not counting for the production staff, it is estimated that at least
20 to 35 individuals are involved in the orchestration of the various
processes for every episode as it finds its way from the Production
House to the actual Broadcast play out. This orchestration cannot
continue to remain manual in the midst of this scale dovetailed with
global expansion (both TV distribution and content syndication) and
TV Anywhere initiatives fundamentally driving the need for digital
transformation.
Digital Transformation amongst others, have meant bringing
together the 35 stakeholders across the digital content supply chain
to collaborate on a single technology platform for every episode,
every day. This translates in to over a million B2B transactions
within Linear TV business for a TV network. This calls for going
beyond MAM to managing the orchestration of the various creative
business processes.
Just as traditional enterprises embraced enterprise applications
like Enterprise Resource Planning (ERP), a new class of applications,
deemed Media ERP have become essential to manage content,
digitally mediate the various internal and external stakeholders
within the content supply chain, and interwork with the other IT
systems within M&E organizations. This virtualization holds the key
to manage the scale, complexity, speed and efficiency dimensions.
This transformation also calls for combined Media and IT skills
within Broadcast networks.
So long as there were physical media in the midst, the industry
traditionally has been very slow in adopting MAM solutions
citing lack of clarity on the Return on Investment (RoI). With the
migration to HD and the digital consumer, MAM adoption became
imminent. Leading independent software MAM vendors like Dalet,
Avids Interplay MAM, Viz Ardome and Cinegy, and traditional
system integrators like IBM, Accenture, HCL and Cognizant were
engaged in implementing these solutions for M&E companies.
Such implementations called for upfront high capital expenditure
and met with little success resulting from the fact that MAM is still
not solving key business problems. Prime Focus Technologies (PFT)
launched CLEARTM, a Media ERP platform in 2008, which today

runs revenue and time critical content operations for the worlds
biggest broadcast networks like Star, Zee, Bloomberg and Disney,
and content owners like BCCI and EROS to name a few. CLEAR was
built as a Cloud-based platform, and offered to clients on a SaaS
(Software as a Service) basis allowing Broadcast Networks to pay
as you go. The other players who have similar Cloud platforms
include Tata Communications Mosaic and Airtel.
This transformation within the Broadcast industry also brings along
fundamental changes to post production industry. The zeal for
making better content would also mean better sound and picture
quality for productions. Virtualization calls for integrated processes
and world class infrastructure within production, translating in to
modern digital infrastructure and TV Hubs that need to be created
to cater to the demand. PFT created True North, a unique TV hub to
realise this vision for the industry.
Digital transformation has also meant Broadcasters building Direct
to Consumer platforms. The digital consumer has thrown open new
complexities for Broadcasters to deal within the IT and online video
domain. Star Indias digital foray in 2012 to woo the sports fan is
a good example of a broadcaster embracing data and video in the
presentation of a consumer experience. We will see more such
endeavors that will redefine the landscape of TV business.
Broadcasting revenues in the US are expected to remain flat
over next 5 years while operating costs are expected to rise at
a faster pace due to proliferation of screens. Compared to the
West where the Broadcast Operations and Engineering (BO&E)
spend as a percentage of revenue is 9.3 per cent, Indian broadcast
players spend approx. 4.5 per cent today. By proactively endorsing
virtualization of content supply chain operations, enterprise
digitization and media process outsourcing, Indias broadcast
industry can escape the challenges that have bedeviled the US and
greatly benefit from enhanced efficiencies, greater organizational
agility and sharper focus on the creative product.
The Indian subcontinent with around 150 million TV households,
present a lucrative market for broadcasters. And broadcasters in
turn require the best of technology innovation to remain competitive
as screens multiply epidemically. Globally the market for media
ERP solutions and media services is estimated to be about USD10
billion. In India we size the market for broadcast segment alone at
roughly INR10 billion and growing steadily.
In order to harness opportunities of the multi-screen revolution,
broadcasters require a strategic partner with deep domain-specific
insights, utmost flexibility and IT expertise for digitally transforming
the business of content. Such a partnership can help them build
sustainable businesses in the long term while remaining focused
on the core product and core constituent creative content and the
omnipresent consumer across devices, apps and platforms.
Ramki Sankaranarayanan
Founder, President & Chief Executive
Officer, Prime Focus Technologies
Unless otherwise noted, all information included in this column/ article was provided by Ramki
Sankaranarayanan. The views and opinions expressed herein are those of the authors and do not
48
03
Print
Regional rupees
Print industry overview

Summary
Print media market
2011
2012
2013
Total advertising
139
150
163
Total circulation
69
75
Total print market
209
Total newspaper revenue

Total magazine revenue
Total print market
2013 Growth
2014p
2015p
2016p
2017p
2018p
CAGR (2013-18)
8.7%
179
199
222
248
275
11.1%
81
8.1%
85
88
92
95
99
4.2%
224
243
8.5%
264
287
313
343
374
9.0%
197
211
230
8.7%
250
273
300
329
361
9.5%
12
13
14
4.5%
14
14
14
14
14
0.3%
209
224
243
8.5%
264
287
313
343
374
9.0%
2013: Steady in a volatile market

The calendar year 2013 saw the print industry in India
grow by 8.5 per cent from INR224 billion in 2012 to
INR243 billion.01 The growth achieved was slightly better
than KPMG in Indias estimation of 7.602 per cent last year.
The long term growth in the sector looks promising with
industry players witnessing strong growth and a possible
future demand in the regional market.
Even though print media has shown steady growth in
the past calendar year, the macroeconomic environment
continues to be challenging. The Indian economy has
witnessed a slowdown in the growth momentum,
clocking an average GDP growth rate of only 4.9 per cent
in FY 2013-14.03
The slowdown can be attributed to a host of factors,
primary among them being the global scenario affecting
Indian markets, weakening of the domestic currency
contributing to higher deficits, consistently high interest
rates and inflation and investment bottlenecks that
prevent corporate and infrastructure growth.
Contrary to the prevailing trends in global print media,
where there is intense competition from digital media,
the print sector in India is showing a strong upsurge. The
print industry is expected to grow at a CAGR of 9 per cent
for 2013-18, as against estimated 8.7 per cent expected
last year.04 Much of this growth can be attributed to
print medias advertising revenues and the faith shown
by advertisers in this medium. Most advertisers have
shunned their cautious approach, backing the extensive
reach and localisation benefits that print offers. Some of
the big spending sectors such as FMCG, Retail, and Real
Estate have increased their media spend on print this
year. Print has also witnessed a boost in its advertising
revenues due to the elections in several states this past
year. Advertising spends by political parties are expected
to benefit the print media in this calendar year as well.04
01.
02.
03.
04.
KPMG in India analysis. Industry discussion conducted by KPMG in India

FICCI KPMG Indian Media and Entertainment Industry Report 2013
Central Statistics Office, Ministry Of Statistics and Programme Implementation
Keeping in view the challenging and competitive

environment of the last few years, print
media companies have continued to take a
very progressive marketing approach. While
keeping a tight control on operational costs,
they have focused on ensuring that the quality
of product was not compromised at all and
therefore efforts were concerted on offering
more readership delight to customers, which in
turn meant providing differentiated, unique and
very customised content across all markets.
This has served the industry well, because with
top consumer brands now focusing on Tier 2
and 3 markets, print companies are able to offer
higher effectiveness through a good mix of a
high quality content with innovative campaigns.
Given the wide diversity of markets covered
by regional publications, they have also been
successful in driving an agenda of verticalisation
of media solutions in a few key categories, viz,
FMCG, LifeStyle and Real estate etc, thereby
delivering great results to media agency
partners and clients.
- Pradeep Dwivedi
Chief Corporate Sales and Marketing Officer,
D B Corp. Ltd.
50
The print industry continued to derive most (94.4 per

cent) of its revenues from the newspaper category.05
The INR14 billion magazine segment had a roller coaster
ride this year. Some prominent publishing houses
discontinued their magazines this year. On the other
hand, specific niche magazines witnessed high growth
with their well-defined readership and advertiser base.
However, the magazine space in India continues to face
growth challenges. The growth in the magazine industry
is expected to decline over the next 5 years and may
constitute 3.6 per cent of the total print industry.05
Projected revenues from newspapers and magazines

Revenue contribution
2012
2013
2014p
Revenue from magazine industry
6%
5.6%
5.2%
Revenue from newspaper industry
94%
94.4%
94.8%
2015p
2016p
2017p
2018p
4.8%
4.4%
4.0%
3.6%
95.2%
95.6%
96.0%
96.4%
Advertising, as stated earlier, is a prime contributor (67

per cent in 2013) to the total revenue earned by the print
sector.05 However, increased dependency on advertising
revenues can hurt the business model of publishers.
Taking cognizance of this fact, a few large players have
taken a step towards increasing cover prices to bring out
balance in the advertising-circulation mix.
launch of newer editions. Most publishers have increased

their cover prices in mature markets such as metros and
tier I cities.
Print sector growth during the last 5 years

15.0
Percentage share of advertising and circulation

revenues
100%
Year on year growth
51
10.0
5.0
90%
35
37
80%
33
33
33
70%
0.0
60%
2009
50%
2010
2011
2012
2013
40%
67
65
63
30%
67
67
Advertisement
Circulation
Print sector
20%
10%
0%
2009
2010
Advertisement
2011
2012
2013
Circulation
Growth in the previous year was driven equally by an

increase in advertisement and circulation revenues. The
drivers for advertisement revenue growth were volume
and yield increase. 2013 saw a rise in circulation revenues
by 8.1per cent year on year as compared to 7.3 per cent
in 2012.05 One of the primary reasons for sustaining this
high growth rate was an increase in cover prices of and
05. KPMG in India analysis. Industry discussion conducted by KPMG in India
While English dailies continued to witness subdued

growth in comparison to the overall industry growth,
regional and vernacular markets performed exceedingly
well on the back of low media penetration, high
population growth and rising income and literacy levels.
The growth of the overall print industry was, hence,
largely driven by Hindi and the vernacular print markets.
The Hindi print market grew by 10.5 per cent from INR68
billion in 2012 to INR75 billion in 2013 and vernacular grew
by 10 per cent from INR69 billion in 2012 to INR76 billion
in 2013.05
2013 was a year of consolidation for the Print media industry. Advertising showed signs of revival, led by a healthy
growth in Hindi print markets despite a difficult economic environment. Our investments in markets like Mumbai and
UP are bearing fruit, while our Radio business continues to grow profitably.
- Vinay Mittal
Chief Financial Strategist,
HT Media
Print media market mix

Print media
market
2010
2011
2012
2013
English Market
79
83
86
91
5.8%
Advertising
53
57
59
62
5.2%
Circulation
26
26
27
29
7.0%
Hindi Market
58
62
68
75
10.5%
Advertising
37
41
45
50
11.3%
Circulation
21
22
24
26
9.0%
Vernacular Market
56
63
69
76
10.0%
Advertising
36
42
46
51
10.8%
Circulation
20
21
24
26
8.5%
193
209
224
243
8.5%
Total print market
Growth in 2013
Going forward, in 2014, the growth of the industry is

expected to be promising with the general elections
expected to pump up the growth in the print sector. The
print industry in India is estimated to grow by 8.5 per
cent in 2014 and reach INR373 billion by 2018, registering
a CAGR of 9 per cent. By 2018, the print industry is
estimated to contribute for 26.5 per cent to the Indian
M&E industry.06
However, a vital factor for the industrys future
performance will likely be the stability in the overall
macroeconomic environment, and publishers innovating
on content as well as distribution to engage with their
consumers in a better way. Industry players are expected
to continue their focus on optimizing efficiencies,
rationalizing newsprint consumption, expanding reach
to new geographies and consolidating in the existing
markets.
The emergence of e-newspapers and the digital media is
a challenge for the print industry. However, poor internet
penetration and relative lack of content beyond English,
can be a major hindrance for the digital medium to make
any significant impact to the print industry in India in the
near future. Thus, print industry is expected to ward off
06.
07.
08.
09.

Tamil Nadu Telugu Makkal Katchi launched, 4 March 2014, The Hindu
Times Group launches NavGujarat Samay, 17 January 2014, The Times of India
Dainik Bhaskar launches Patna edition, 21 January 2014, www.afaqs.com
the perceived threat posed by digital media and clock

strong growth in the future. Though the decline in Indian
print media isnt as pronounced as it is in the west, yet
the flow of English readers from print to digital media and
increasing advertising pressure cannot be ignored.
Key trends of 2013 and sector

growth drivers
Circulation revenues give a much needed
push
In 2013, circulation revenue witnessed growth of 8.1
per cent which is marginally higher than the growth in
the circulation revenue in 2012 of 7.3 per cent.06 Various
national as well as regional players have expanded their
reach by means of launching newer editions in local
languages or sub-editions by adding printing centers
in the local areas. Some examples include The Hindu
launching a Tamil edition07; Times of India launching a
Gujarati edition NavGujarat Samay08 and Dainik Bhaskars
entry into Patna.09 DB Corp has also consolidated its
presence in MP with the launch of a 4th edition.10 HT
Media also has separate editions for Gurgaon and Noida.11
Given below are the total number of newspapers and
periodical registered with The Registrar of Newspapers of
India.
Number of registered newspapers and

periodicals
Year
Dailies
Others
Total
Growth
2002-03
5,966
49,814
55,780
7.4
2003-04
6,287
52,182
58,469
4.8
2004-05
6,530
53,883
60,413
3.3
2005-06
6,800
55,683
62,483
3.4
2006-07
7,131
57,867
64,998
4.0
2007-08
7,710
61,613
69,323
6.7
2008-09
8,475
64,671
73,146
5.5
2009-10
9,355
68,029
77,384
5.8
2010-11
10,205
72,017
82,222
6.3
2011-12
10,908
75,846
86,754
5.5
2012-13
12,511
81,556
94,067
8.4
Source: Registrar of Newspapers for India - http://rni.nic.in
10. Dainik Bhaskar expands footprint in Hindi heartland with 4th edition from MP, 4 December 2013,
www.exchange4media.com
11. HT Media launches Hindustan Times for Gurgaon, 23 May 2013, www.afaqs.com
52
53
In the year 2012 13, the highest number of newspapers

and periodicals were registered as compared to the
last one decade. This has contributed significantly to an
increase in circulation revenue. Out of the total 7313
new editions registered, English (696 editions) and
Hindi (3,240 editions) accounted for approximately 54
per cent. As on March 31, 2013, total registered English
and Hindi newspapers and periodicals were 12,634 and
37,891respectively.12
Circulation revenue mix

Language
Projected circulation revenues

Language
2013
2014p 2015p 2016p 2017p 2018p
English
29
30
CAGR
(2013-18)
31
32
32
33
2.7%
Hindi
26
28
29
30
32
33
5.2%
Vernacular
26
27
28
30
31
32
4.8%
Total
circulation
market
81
85
88
92
95
99
4.2%
Growth
in 2013
2009
2010
2011
2012
2013
English
25
26
26
27
29
7.0%
Hindi
20
21
22
24
26
9.0%
Vernacular
20
20
21
24
26
8.5%
Total circulation revenue
65
67
69
75
81
8.1%
As seen in the previous years, the penetration pricing

strategy followed by new entrants, which also forced the
incumbents to cut prices to sustain their volumes, was
not witnessed on a large scale in 2013. However in Bihar,
in a bid to fortify their market shares, existing players
Dainik Jagran, and Prabhat Khabar have cut down their
cover prices to INR2.5 from INR4 (Dainik Jagran) and
INR3 (Prabhat Khabar)13. On the other hand, there are
instances wherein publishing houses have increased the
cover prices as a counter measure against the increasing
newsprint cost and depreciating rupee.14 HT Media has
systematically increased the cover price over a period
of time in few markets such as mumbai and UP.14 ABP
Pvt. Ltd., which runs The Telegraph, an English daily and
Anandabazar Patrika, a Bengali daily, had raised the cover
price in September 2013.15 The cover prices of its Bengali
daily and newly launched E bela tabloid was increased
to INR3 from INR2 while the Anandabazar Patrika was
increased to INR5.15 For Jagran Prakashan 8 to 9 per
cent out of 14 per cent growth in subscription revenues
came from improvement in cover prices.16 The Hindu
has increased its cover price in some markets. Inspite of
the increase, the cover prices of Indian newspapers still
remain one of the lowest across the globe.17
The significant growth experienced by print companies in
circulation revenue is not expected to continue. The CAGR
from 2013 to 2018 is expected to be 4.2 per cent.14 The
marginal growth in circulation revenue will be largely be
driven by increase in circulation and number of editions by
regional players.
12. Registrar of Newspapers for India - http://rni.nic.in
13. Print war in Bihar intensifies; Dainik Bhaskar set to enter next month, 17 December 2013,
exchange4media.com
14. KPMG in India analysis. Industry discussion conducted by KPMG in India
15. ABP raises cover prices of its Bengali dailies, 10 September 2013, Business Standard
16. Expect higher news print price going forward, 26 November 2013, www.moneycontrol.com
17. FICCI - KPMG Indian Media and Entertainment Industry Report 2013
18. HT refreshes Page One, 12 September 2013, www.afaqs.com
19. Innovations that make newspapers alive and kicking, Issue: Nov-Dec 2013, Vol. # 8, # 6, All About
Newspapers
20. The Hindu launches hub of information, 29 August 2013, www.afaqs.com
21. Now a magazine for visually impaired, 29 April 2013, www.afaqs.com
22. The challenge of multiple transitions in India - Press Institute of India, 1 September 2013,
www.pressinstitute.in
Innovation - product, content and

distribution
There is possibly nothing worse than a newspaper facing
the lack of interest from its readers. To differentiate
themselves from competitors and to grab eyeballs,
most newspapers consistently innovate on design, infographics, supplements, features and other approaches.
One such example is Hindustan Times Page One Plus.
This is a vertical perforated page appended on the front
page, which gives the readers an option to remove it
and read it on the go. It compiles all the important news
in concise manner and provides the reader with a quick
snapshot of everything that he needs to know about the
important stories in the newspaper.18
A few other examples of innovations which have given an
impetus to the revenues of the publishing companies are
given below:
Times of India introduced a 3-D advertisement of the
TV series Mahabharat in mid-September last year.19

The 3-D ads have generated a lot of interest among
the readers especially youth, who access multiple
sources for news and information. The Hindu, the
south India-based English daily has launched a micro
site, www.thehinduhub.com20, that carries information
about the readership numbers and circulation of The
Hindu newspaper and its several editions, as well
as other publications of the group across different
states and cities. This is an attempt to communicate
better with media planners, buyers and marketers and
provide relevant information on the events executed,
various innovations on offer and its future plans for
advertisers.20
Magazine for Visually impaired - National Association
for the Blind. With the launch of this magazine, visually

impaired individuals in India are able to get their
monthly dose of leisurely reading. Titled White Print
magazine, the monthly offering is touted as the Indias
first English lifestyle magazine in Braille.21
In addition to product innovation, distribution innovation

was also seen with i-next introducing vending machines
for selling newspapers in 10 cities across UP, Jharkhand,
Bihar, and Uttarakhand.22 Newspaper vending machines
are used worldwide, and they are often one of the main
distribution methods for newspaper publishers abroad. In
India, however, the trend is catching up somewhat slowly
and thus is likely to give the first movers advantage to
the publication.
State and Lok Sabha Elections to give

necessary boost to the print sector
Election spending by the government and political parties
is set to significantly add to the ad expenditure across
all media, with print emerging a frontrunner.23 Recently
concluded State elections in five states provided a much
needed fillip to the media sector, especially the print
segment which was struggling from slowing revenue
streams. Further, since most the state elections were
carried out in the Hindi heartland (Madhya Pradesh,
Chhattisgarh and Rajasthan) the Hindi print media
benefited significantly from the state elections.24 DB
Corps Q3 results prove the point. The print major has
posted revenue growth of 18.1 per cent YoY largely
because of higher ad revenue. However, if adjusted
to election-related spending in MP, Rajasthan and
Chhattisgarh, print ad revenue growth stood at 15 per
cent YoY.25
Further, the penetration levels of product categories such

as consumer durables, automobiles and financial products
in these towns are substantially lower than in the large
cities. Circulation growth of Hindi and vernacular papers
is and would continue to be higher than English papers.27
Existing Hindi and vernacular players are expanding
by either launching editions in new geographies or by
launching sub-editions at a place, where an existing
edition is already available for e.g. it is in recognition
of the power of Hindi that both BCCL and HT Media
have thrown their clout behind Navbharat Times and
Hindustan respectively.28 Navbharat Times re-launched its
Lucknow edition earlier this year, after closing it in 1985.29
Hindustan Media Ventures Ltd. (HMVL) Hindi daily,
Hindustan, is also planning to start more editions in its
core markets of Uttarakhand, Bihar and Uttar Pradesh.28
One of the key drivers for advertisement growth in 2014

could be the advertising spends by political parties on
the Lok Sabha election. According to the Pitch Madison
Media Outlook Report 2014, approximately INR25 billion
of advertisement revenue across all the media segments
is expected to come from the Lok Sabha elections. This
is significantly higher than approximately INR5 billion
spent during the 2009 election.26 The ad spend may not
only be driven by political parties, but also by hundreds
of individual candidates, who may also carry out small
campaigns in print, radio and outdoor.
At a macro level, the economic environment

seems to be taking steps towards recovery as
the country gears to refocus on implementing
measures to restore fiscal and economic
health. We look forward with cautious optimism
as we continue to fortify our competitive
strengths to harness the existing potential of
the regional print media segment. We have
taken an even more aggressive stance to further
strengthen the fundamentals of our business
through various growth-oriented initiatives
that were sown as seeds of change this year.
Cost rationalisation, operational efficiency,
content innovation and adaptation, and market
expansion in high growth regions were the
four key strategic areas that were very closely
monitored and delivered visible results. We
took confident strides towards expanding
presence to seven editions in Maharashtra
with new launches of Divya Marathi in Akola
and Amravati, while we also look forward to
our launch in Bihar for which we made good
progress this year. Our Dainik Bhaskar Unmetro
- The markets driving India endeavour has
created even more excitement amongst us that
analysed and highlighted the potential offered
by the cities of India, beyond the metros and
brought together wide ranging perspectives of
industry stalwarts. Evidently, we continue to be
excited with the growing consumption potential
of these regions.
One of the national parties in India has allocated INR4

billion for its mass media ads, which include, television,
print, radio, outdoor and digital and around INR1 billion for
on-ground activities. Out of the total spend, around 30 per
cent is estimated to be spent on the print medium.26
Is regional really the new national for print

media?
With the metros and larger cities increasingly witnessing
intense competition, marketers, advertisers and
publishers are trying to consolidate their presence in the
regional markets through new launches and acquisitions.
The process of expansion and consolidation has been
taking place for the last couple of years and states such as
Maharashtra, West Bengal, Gujarat and Tamil Nadu have
seen several major players enter the market.27
The regional media has been an important element in
the growth of the Indian M&E industry over the past few
years. Given the size and diversity of the Indian market,
media owners and advertisers are increasingly adding a
regional element to their strategies. As a result, regional
markets have grown in size and importance.27
Changing demographic dynamics and rise in incomes
most likely have ensured a surge in purchasing power in
tier II and tier III cities. The rise in literacy rates, significant
population growth, high aspiration, resilience of the
agrarian economy, increasing demand for region-specific
content, and expansion by players into new geographies
and languages could drive future expansion of regional
newspapers circulation and readership across India.
- Girish Agarwaal
Promoter Director,
D B Corp. Ltd.
23.
24.
25.
26.
27.
28.
29.
Print ads to pip TV in poll year, 10 February 2014, The Hindu Business Line
Industry discussion conducted by KPMG in India
Elections boost DB Corps Q3 performance, 17 January 2014, Television Post
Nail-biting for politicians but win-win 2014 for ad agencies, 11 February 2014, The Indian Express
Print special report, afaqs reporter, August 2013, www.afaqs.com
Navbharat Times to re-launch in Lucknow after 28 years, 20 March 2013, www.floost.com
54
55
Moreover, from the point of view of advertisers, the

cost of reaching the audience is much lower compared
to national media like television mostly due to lower
advertising rates. However, with the rollout and
implementation of radio phase 3, print is expected to face
some competition in these markets.
Traditionally, English language papers have enjoyed a
substantial share in revenues; however, revenues from
non-English papers are growing, erasing the traditional
advantage that English papers enjoyed. As more
advertising spends are being directed towards tier-II and
III cities, existing players are expanding in these regions,
by launching more editions. Share of English papers was
37 per cent in 2013, however, it is expected to be 31 per
cent by 2018.30
Estimated share of business by language in 2013
The Hindi print market has seen both advertisement and

circulation revenues grow in double digits. On the other
hand, circulation revenues have not picked up as strongly
in the vernacular markets compared to the Hindi market.30
One of the major factors for this has been limited
increases in the number of editions.
FMCG sector favours print media

For the first time, FMCG became the largest contributor
to print and TV, overtaking auto and education.31 As
per the Pitch Madison Media Advertising Outlook, the
advertising pie of FMCG companies was 12.3 per cent,
which is significantly higher than the share of FMCG
companies in 2009 of 7.2 per cent. Auto sector was the
second highest spender on the print medium followed by
Education and Real Estate. Share of Education sector has
been continuously declining over the last 5 years i.e. from
17.3 per cent in 2009 to 9.7 per cent in 2013.
FMCG companies are targeting Tier II and Tier III cities
for their next level of growth and the ability of the print
medium to directly reach out to the target audience
with it plethora of editions has likely resulted in increase
in advertising spend on the print medium. Further, the
combination of print advertisement and ground activation
has also worked as a successful formula for the FMCG
advertiser.
Estimated share of business by language in 2018
Print, especially Hindi newspapers, had their

own ups and downs. On the up side, FMCG
sector, particularly, personal products category
has given remarkable growth to print revenue.
Education sector has been a cause of concern.
This category used to be one of the biggest
revenue generator for the newspapers, but
now is exhibiting depressing trends. May be
expansion phase of this category, for time
being, seems to be over and it is entering the
consolidation phase.
Real estate, another important contributor to
print revenue, it is heavily impacted by local and
state governments rules and by laws. Any small
changes in them create ripples on negative or
positive side.
- Arvind Kalia
National Head - Marketing,
Patrika Group
30. KPMG in India analysis, Industry discussions conducted by KPMG in India

31. Elections set to fuel Ad industry growth, 21 Feb 2014, The Hindu
Penetration of large media houses into

newer geographies
This year, several publishing houses entered new markets
with regional editions. A prominent example being, The
Hindu, launching a Tamil newspaper edition to cater to
Tamil speaking consumers.32 There was a time when a
select group of newspapers ruled a particular region and
they mostly were self-contained and did not wish to foray
into other regions. For example, Hindustan Times was
confined to Delhi region, The Hindu in Chennai region,
while Tribune was dedicated to Ambala (later Chandigarh)
and Anandabazar Patrika was confined to West Bengal.33
As newspaper groups try to develop a network of
editions across states an languages, change is likely being
ushered in; bigger publications which primarily catered to
metropolitan cities are mostly trying to make inroads into
the interior parts of country in search of newer readers.
This in turn may have led to region specific editions across
the country and acquisitions of smaller players in these
markets.
focused on trying to monetize digital. However, large

media houses in India have been increasingly participating
in the digital ride. For example, The Indian Express has
been quite vocal about its digital ambitions. The group
has re-launched its digital properties. In June 2013, the
groups online property witnessed more than 60 million
page views as compared to 20 million in January 2012.
Other examples are the Times Group that has partnered
with Gizmodo and Business Insider to push digital
revenues. Mint, the financial daily of the Hindustan Times
Group, has gone digital and has launched several online
initiatives.38
Digital media requires media companies to

deliver content through print, digital and mobile.
- Pradeep Gupta
Chairman,
Cyber Media
Apt use of Social Campaigns

Newspapers today are taking their social service role
to a whole new level with not just news articles, but by
supporting causes and using their widespread reach
to create awareness about these issues. DNAs latest
campaign Good is in our DNA looked to connect with
good samaritans and provide people a platform to share
good activities that are happening.34 Apart from the
national dailies that have a wide reach, many regional
players are also making a difference with these social
campaigns.
Hindustan has recently launched Friends of Hindustan in
Patna.35 The initiative aims to identify peoples problems,
empower them to voice these and in the process create
a movement. These Friends would reunite to discuss
various problems, the progress made on them and also
the way ahead. Dainik Bhaskar for its social campaigns
like Beti Bachao and Jid Karo Duniya Badlo has used onground activities in addition to print and TVC. The Bhaskar
Group has also launched a second edition of Brain Hunt,
to engage with young readers who a key demographic for
any newspaper especially when keeping an eye on the
inevitable digital surge.36
Hindus Undumb India campaign used various ATL and
BTL activities to drive home the message that knowledge
is cool, with a vision of making India an informed
country.37
Digital yet to make a significant dent on the

revenues - however the threat cannot be
ignored
In Western countries, many publications are transitioning
away from their print business and focussing their
attention on digital, to cater to the changing needs of their
consumers.
Most Indian publishers have created an online presence,
but the actual wave of digitization is yet to be felt in
India. In India, where print is still strong, most publishers
are still focused on print with digital being a category
that supplements print. Very few Indian publishers are
The emergence of digital and social media news delivery

has the potential to pose a challenge for the print industry.
However, low literacy rates and poor internet penetration
could be a major hindrance for the digital medium to
make any significant impact to the print industry in India.
Another point to note is that newspaper consumption
habits are different in India as compared to the western
world. In addition to extremely low cover prices, India is
also a high home delivery market39 which often plays
a role in habit formation. Digital has a very important
advantage in terms of reaching the consumers quickly and
distribution of real time content to the consumers. More
than reach, digital offers a great opportunity to interact
and involve the reader in a two-way communication. The
bigger risk for the print medium is not from technology
alone, it comes from the content itself. It is very important
to engage readers in a constructive dialogue in an era
where facts are available freely through multiple sources.
Newspapers could be expected to need to experiment
more, provide differentiated content and start building
communities to thrive in this highly competitive era.
Even as print media shows steady growth, digital media
is showing higher growth than print.39 So, the question
advertisers and publishers face today is whether digital
is finally beginning to eat into the print pie in a significant
way. For the display advertisement business, the impact
may not significant, but the classified business has likely
borne the brunt of digital medium. In India, the size of the
online classifieds industry was estimated at INR18 billion
at end of 2013 and it is expected to grow to about INR45
billion by 2018 with a CAGR of 20 per cent.39
32.
33.
34.
35.
36.
37.
38.
39.
Tamil Nadu Telugu Makkal Katchi launched, 4 March 2014, The Hindu
Indian newspapers latest trends, 7 Sep 2013, www.printweek.in
Print takes social route to engage readers, 30 December 2013, www.exchange4media.com
Hindustan launches Friends of Hindustan in Patna, 21 December 2013,
Dainik Bhaskar launches second edition of Brain Hunt, 19 December 2013,
The Hindus multi-media campaign making education cool goes viral, 24 July 2013,
www.inma.org
Indian Print Medias Innovation Dilemma: Digital Natives are coming, 30 July 2013,
www.nextbigwhat.com
KPMG in India analysis, Industry discussions conducted by KPMG in India
56
57
In order to increase relevance, publishers

have invested in augmenting printing capability
to ensure that the pages are finalised as late
as possible so that most recent news can be
covered, covering more stories on the front
page, creating hyper local editions etc are some
of the initiatives.
- Bijoy Sreedhar
Senior Executive Vice President
Lokmat
Compared to the past, the scenario at present is that the

digital medium has not made significant impact on the
reader base for print companies. Most readers have now
started using mobiles, tablets and computers to access
news. The personal relationship that readers of the past
had with newspapers is slowly being replaced by their
relationships with their smartphones and social media. It
is a battle for attention minutes as much as it is for media.
Reach of News/Information Category
Average Time Spent on

News/Information Category (Minutes)
Source: ComScore India Digital Future in Focus 2013.
The news and information market in India is

underdeveloped as compared to the other BRIC
countries. As compared to Brazil, where the reach of
news/information is 88.4 per cent and the average time
spent by each user is 69.7 minutes, in India, the reach is
56.8 per cent (lowest among all BRIC countries) and the
average time spent is 33.5 minutes.40
40. ComScore India Digital Future in Focus 2013
However, the trend seems to be fast changing. ComScore

released a report highlighting online news readership
in India based on data from its ComScore Media Metrix
service. The report showed that there has been significant
growth in daily readership of news and information
content in the past year, with an increase of 34 per cent to
9.4 million average daily visitors to the category.
Till now, it is believed that print sector has been

nourished by its smaller editions and printing
centres, which drives growth. In future, these
smaller centres may not be key drivers of print
revenue due to more acceptability of smart
phones and other options of advertising such as
regional TV channels etc.
- Arvind Kalia
National Head - Marketing,
Patrika Group
Online news readership

August-12 August -13
Total Unique Visitors (in 000)
Total Visits(in 000)
Average Daily Visitors (in 000)
Average Minutes per Visitor
% change
40,044
45,902
15%
2,59,686
3,64,592
40%
7,042
9,402
34%
31.6
41.6
31%
Source: ComScore Media Metrix
BTL Activities and Activations gain

prominence
Another important development in the print media is
that companies today are not only buying space on
newspapers, they want innovative strategies of how to
drive home the message through the print medium. In
the coming years, media sales are likely to become more
about ideas and solutions and less about physical formats
such as space and time. Media sales teams and planner,
therefore, may invest in expertise in below-the-line
activities, activation, etc. Advertisers have started to and
could continue to focus more on the ground activities to
reach out to their customers.
There is a clear trend of shifts in client spends from ATL
to BTL. With the increase of modern trade, the desire to
reach and engage the consumer directly is increasing for
the advertisers. In 2000, the ATL: BTL spends ratio was
approx. 80:20. Aegis Media calculations indicated that by
2015 this may change to 50:50.41 Even if this ratio is not
achieved, there seems to be a clear movement in that
direction. There is a clear trend and potential need for
areas such as Events, Ground Activation, Retail and Rural
Marketing to get their share of marketing spends. 2014
may only see this trend increase.
41. Consolidation, activation and BTL among key trends in media industry in 2014, 9 January 2014,
42. DAVP ad rates for print media raised by 19 per cent, 18 November 2013, www.livemint.com
DAVP ad rates for print media raised by

19 per cent42
FThe government announced a 19 per cent increase in
advertising rates it pays to newspaper companies for
publishing its advertisements. DAVP ad rates have been
hiked to account for the significant increase in newspaper
costs since the last hike. DAVP is the media buying and
publicity arm for the government. The government spent
INR4 billion42 through DAVP last year and is a large buyer
of print media. The price increase could boost this figure.
This change augurs well for print media companies which
are struggling in a challenging economic environment.
In addition, the hike is expected to influence the state
governments to increase rates. State Governments
spend nearly INR20 billion42 on print advertisements in a
calendar year. Regional languages and Hindi newspapers
could stand to benefit more from this hike than their
national counterparts.
Publishers had been building a case for a 100 per cent
increase in DAVP rates as the costs of newspapers have
more than doubled since the last hike. They, hence,
feel that the proposed increase has been very meager
compared to the industry scenario. Nonetheless, the hike
is certainly in the right direction and brings cheer to the
print industry.42
Print likely to gain at televisions expense

With the 12 minute advertisement cap development in
the broadcasting sector, there will be considerable decline
in the inventories and many broadcasters are likely to face
financial difficulty in the coming years. Some of this loss
of inventory is expected to be captured by print, as some
advertisers analyse the impact to their media budgets
based on an increase in rates by leading broadcasters.43
The quantum of advertisements has increased on the
print side in the last few months of 2013, especially in
the dailies. The benefit of the ad cap was not completely
reaped in 2013, but in 2014 print companies expect the
gain to be material. In 2013, leading consumer brands,
especially technology brands, have allocated a bulk
of their ad pie to print dailies. Recent supplements of
major national dailies saw four pager and two pager
advertisements from various brands like Apple, Samsung,
Amazon, Sony, Micromax, etc.43
43. Print and digital to gain at televisions expense, 29 October 2013, www.exchange4media.com
58
Key challenges
Global headwinds continue to unleash a spate

of inflationary pressures on the industries
Supply chain. Insolvency of European equipment
manufacturers, as also calibrated winding down
of newsprint capacities, have been topped up by
debilitating impact of currency meltdown during
3Q 2013. The situation is further aggravated by
the high volatility quotient of these trans-national
nuances .
Readership Measurement: A challenge

which remains unresolved
Readership measurement still remains one of the key
challenges for the print media market with The Indian
Newspaper Society (INS), an umbrella association of
the newspaper industry, rejecting the Indian Readership
Survey (IRS) 201344 conducted by research agency
Nielsen and the Media Research Users Council followed
by the discontinuance of association by 18 print players
including BCCL, DB Corp, ABP Pvt. Ltd. and India Today
group.45
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Domestic
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Q4 2011
The print industry faces another challenge with the recent

decision of the Supreme Court that asks newspapers
and news agencies to implement the recommendations
of the Majithia Wage Board, which means newspapers
and news agencies will now have to pay their employees
the revised pay scale with arrears from November 2011.
Furthermore, the employees will also be paid revised
wages from April 2014 onwards, as per the Supreme
Courts decision. The revised pay scale has proposed a
considerable pay hike for the industry employees. This
could spell trouble for the print industry which is already
reeling under pressure from rising newsprint prices.47
Newsprint price
Q3 2011
Implementation of Majithia Wage Board to

adversely impact newspaper industry47
Weakening rupee-dollar exchange rate coupled with

increasing newsprint prices has taken a toll on the print
industry in India. INR has weakened approximately 20
per cent in the past year and the increase in newsprint
prices has been approximately 5-10 per cent YoY. Nearly
48 per cent of the newsprint used by Indian publishers
is imported and the weakening rupee has significantly
increased the newsprint costs for the print companies.48
Q2 2011
The MRUC has taken cognizance of these protests and

has subsequently put on hold the survey results till March
31. In the meantime, they have already initiated the revalidation of data.46 In absence of a credible measurement
parameter and given the lack of clarity, advertisers and
media owners face huge challenges in media planning
and spending.
Indian print industry hit by depreciating

rupee and increasing newsprint cost
Q1 2011
Having begun on a fresh slate, the new IRS data was

expected to bring more accuracy in the measurement of
readership. Contrary to the expectations, the IRS data
has not been accepted by the print industry. The Media
Research User Council Board (MRUC) and Readership
Survey Council of India (RSCI), are the two bodies that
undertook the readership survey. On being published,
several large media houses protested after seeing
significant variance in the results as compared to previous
years. The media houses claimed that the survey results
grossly contradicted the audited circulation figures
(ABC).46
- Mohit Jain
Executive President,
The Times of India Group
Cost per tonne (INR)
59
Canadian Newsprint
Source: Crisil research
Thus, the Supreme Court decision has received a lot of

flak from the industry players and experts who claim that
implementation of the revised pay scales will negatively
affect the financial health of the newspaper publishers.
In a free economic environment, when no other industry
has wage boards, industry experts believe that it is not
desirable to have the Majithia Board decide wages for the
print industry.47
44. Indian Newspaper Society rejects IRS 2013 findings, 5 Feb 2014, articles.economictimes.
indiatimes.com
45. Top newspapers quit IRS in protest, 5 Feb 2014, The Times of India
46. Does the industry need an alternate currency to the IRS?, 6 February 2014,
47. Blow to newspaper industry as SC upholds wage boards advice, 8 February 2014, timesofindia.
indiatimes.com
48. Indian print industry hit by depreciating INR and increasing newsprint cost, 19 July 2013,
Break-up of domestic and imported newsprint

consumption
Magazines growth continues to be a

challenge
The magazine industry witnessed a growth of 4.7 per
cent50 and is valued at INR14 billion50. The industry is
concentrating more on focussed content category
magazines as compared to the general content category
ones. because it feels that readers are interested in
special interest and niche content magazines and this
could be an opportunity formonetisation in the long run.
Few such launches include a 60 page annual magazine
launched by Mumbai Indians, an IPL team51; Discovery
Channel Magazine introduced by Discovery Networks
Asia-Pacific and the India Today Group52; Highlight
Champs and Highlight Genies unveiled for children by
Delhi Press53 and Highlights and Discover Kashmir, the
first ever travel magazine from the travel trade fraternity
of Kashmir.54
30.0
25.0
12.8
20.0
15.0
6.8
6.8
10.0
5.0
9.1
7.6
7.9
8.9
9.9
10.3
10.4
11.0
9.9
9.6
10.5
10.7
10.9
10.6
13.8
Domestic
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
2004-05
2005-06
2006-07
0.0
Imported
Due to the increasing pressure from competitive media,

magazines are witnessing closure of some of the national
and international titles, e.g. The Outlook Group had
announced the closure of three of its magazines, Marie
Claire, Geo and People.55 The industry is also increasing
the cover price in order to bridge the gap between the
product revenue and publishing cost and reduce the
burden on advertisement sales.
Source: ComScore Crisil research
Moreover, print forms a major portion of the publishing

companys total costs. This effectively means this is a
cause of worry for the newspaper publishers. Although
some publications have increased their cover prices to
factor this cost increase, other publications are focussing
on optimizing other costs. The rupee depreciation has
wiped out around INR12 billion from the Print Media.
It is assessed that English press where imported
newsprint accounts for more than 50 per cent of the
total requirement is affected more than the language
newspapers. Worst hit by the hike in newsprint prices
could be the smaller publishers, who already operate on
thin margins and bottom lines.49
But, despite the challenges magazines do enjoy

the undivided attention from readers. According to
Engagement survey report conducted by Association of
Indian Magazines, 87 per cent of the readers do nothing
else while reading a magazine. Further, the survey
also highlights that for genres like home decor, health,
accessories, travel and clothing, magazines remain to be
the preferred source of information.56
Magazines - preferred source of information for various segments

38
27
27
34
22
30
22
18
17
20
18
16
14
13
7
13
17
15
15
7
7
3
Clothing
Home decor
Beauty and health
Accessories
Magazines
Newspaper
Television
15
14 13
Radio
Internet
Travel
WOM
Source: Association of Indian magazines - Engagement survey
49. Indian Print Media hit by depreciating INR and increasing newsprint cost, 19 July 2013,
51. IPL 2013: Mumbai Indians launch annual magazine, 19 April 2013 , www.cricketcountry.com
52. Discovery, India Today to launch new magazine in India,14 February 2013,
53. U.S. Magazine Highlights and Delhi Press Launch New Childrens Magazines in India, 18 April
2013, newdelhi.usembassy.gov
54. Kashmirs First Travel Magazine Launched, 10 June 2013, www.kashmirlife.net
55. Outlook group shuts down 3 magazines, 27 July 2013, The Hindu
56. Association of Indian Magazines, Engagement survey, 2012
60
61
Industry wants to increase FDI Ceiling to 49

per cent57
The Indian Newspaper Society (INS) has made a pitch
to increase the FDI limit in print media from 26 to 49 per
cent stating that print companies need inflow of funds
to expand and grow. At a time when the print industry
is likely on a path of decline in the western world, India
has observed strong growth in this medium. To sustain
this growth and mitigate the risk of rising cost, media
companies may need inflow of funds to expand and reach
every corner of the country.57
Conclusion
Indian print industry saw a steady growth of 8.5 per cent
in the year 2013, the growth being backed by impetus
from state assembly election advertisement revenue,
increase in circulation and cover prices.58 Although the
first quarter of the next year looks promising on the back
of an advertisement boost from Lok Sabha elections, the
second half seems to be challenging and could depend
on how economy shapes up. The upcoming election
results could decide whether the policy measures taken
by the government can pave the way of recovery for the
Indian economy and restore its fiscal health.
Print continues to be the most engaging medium.

It captures undivided attention of the reader as
it is consumed in personal space with a relaxed
mind .
- Pradeep Gupta
Chairman,
Cyber Media
The sector is projected to grow at a CAGR of 9 per cent

and touch INR373 billion by 2018.51 The opportunity
may lie in capitalising on expansion opportunity and
tapping the growth potential in regional markets
while concurrently the challenge could be to explore
consolidation opportunities within the existing markets.
57. Print media to govt: raise FDI ceiling to 49 per cent, 27 September, 2013,
www.zeenews.india.com
Newspaper industry continues to battle muted

advertising growth resulting from the uncertain
economic environment. On the other hand,
saturation of metro markets is driving publishers
to cost-intensive forays into Tier II / Tier III
markets. Recent judgment of the Supreme
Court, upholding an archaic act to prescribe
employee salaries, will cast an onerous burden
on an already stressed Business margin.
Non-remunerative pricing of Governments
advertisements is further under-mining viability
of the Indian Print media.
- Mohit Jain
Executive President,
The Times of India Group
Innovation in product, content and distribution; increasing

demand for region-specific content; and expansion
by large players into new geographies and languages
resulting in increased penetration of regional print
media; appropriate usage of social media and increase
in below the line activities can pave the way for growth
in the next year. The print industry operates in a dynamic
environment with readers needs and preferences
changing continuously. In such an environment, it is
imperative for publishers to innovate consistently and
also engage and interact with their readers on a real
time basis. There are a plethora of opportunities that
could benefit the flexible players who can adjust to the
changing environment. Going forward we may witness
expansion in regional markets and consolidation in
established markets with only the fittest players surviving
the changing environment.
2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated
2014
KPMG,
an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
with KPMG International Cooperative (KPMG International), a Swiss entity.
All rights
reserved.
62
04
Films
Exhibiting strength
Executive summary: Year 2013

2013 was another good year for the film industry. Coming
off 2012, a record year1, the industry recorded a strong
performance both in terms of content and box office
collections. As anticipated, the year was marked with
movies which scored big at the box office with stronger
stories, grander sets, experimental concepts, new
faces, multistarrers and strategic marketing initiatives,
which has pushed the envelope further for the Indian
film industry.2 While the capital poured in through
organised and unorganised channels, the industry
still faced challenges in delivering robust bottom line
results. In order to deliver better returns, players have
started contesting the traditional success formulas.
A quick look at the recent box office collections shows
that the traditional notions of delivering a blockbuster
performance have been tested, defeated and buried
deep under. The audience have shown their appetite for
differentiated content, continuing the story of evolution
of the Indian audiences. The audiences, in many cases,
stayed away from the regular run-of-the-mill concepts,
barring a few megastarrers that were able to pull in
viewers based on star persona and past successes.2
focussed on encouraging the audience to use online

platforms for booking tickets. While monetising of content
on digital delivery platforms remains a concern in the
short term, the industry is buoyant about its long term
potential due to improved internet access at affordable
prices. The drop in 3G prices and the imminent launch
of Reliance Jio are encouraging developments in driving
broader adoption of high speed internet.
The Indian film industry is uniquely characterised by its
heterogeneous nature. The industry is a confluence of 10
key language markets - Hindi, Telugu, Tamil, Malayalam,
Kannada, Punjabi, Bengali, Marathi, Bhojpuri and Gujarati.
Each market is unique in its behaviour and audience
preferences. The industry is observing greater interaction
across the language markets from exchange of talent
to remake movies in different languages. Most of this
has been possible due to studios forming alliances with
regional players and co-producing movies.
Each market in the country is evolving

differently; Hindi and Telugu movies continue to
have a star centric wide release strategy with
most of the box office collections accruing in
the first week of release. In the case of regional
language movies, especially Tamil, Bengali,
Marathi and Malayalam, it has been noticed that
native content driven smaller budget movies
release in fewer screens initially and, based on
audience reception and positive word of mouth,
the number of screens for the movies increase in
the forthcoming weeks, many a time running for
even up to 50 days with high occupancy.
Content has always been the king, however it used

to struggle to reach the audience on time and content
owners thus grappled with issues such as piracy which
would eat away a major share of producers revenues.2
The necessary digital infrastructure has now been
developed to allow the king to travel quickly to its
audiences in both metros and regional parts of India.
The Indian film industrys growth has been fuelled by
the expansion of the multiplexes that have enabled
players to effectively segment the market.2 While the
audience now have access to a greater variety of content,
available at various price points, production houses can
now seek to develop theme based movies which attract
a niche audience but deliver a strong positive return on
investment.
It has been another year of strong growth for

the theatrical business which still accounts for
the lions share of the overall revenue, albeit
revenues from other streams have also grown,
though not at the same pace as theatrical. While
star driven blockbusters continue to draw in
audiences, high concept movies with younger
talent in front and behind the camera are
showing signs of increasing in salience.
- Siddharth Roy Kapoor
Disney India
The industry has been one of the greatest beneficiaries
of digitisation; from shooting the movie on digital formats
and distributing content across various locations, to
marketing the film on various social media platforms to
monetizing content on video on demand (VoD) platforms.
Wider acceptance of ticketing systems and online ticket
booking have also been catalysts in driving transparency.
The industry did not stop there as many exhibitors
- Arvind Ranganathan
Real Image
Production
The Indian film industry has players like Yash Raj Films,
Dharma Productions, Rajshri Productions, Mukta Arts
etc. who have been involved in film production since
the 1960s and 1970s. These larger production houses
and international players including corporate houses
like Disney India, Viacom18 Motion Pictures, Fox Star
Studios, Reliance Entertainment, etc. continue to drive
a professional and management driven approach to
production, distribution and marketing of films.
Indian production companies are increasingly placing
emphasis on a balanced slate and are shifting away from
producing star-driven films to content-oriented films with
new talent. The move is primarily driven by considerable
increase of over 1530 per cent2 in production costs.
While the cost structure varies for different films; artist
fees continue to constitute a major portion of the overall
films budget. Corporatisation is leading the industry to
become more prudent in producing movies. The preproduction phase of movies has become more structured
with greater emphasis given to acquisition of script,
planning, budgeting and financing activities.
01. The power of a billion-Realizing the Indian dream, FICCI-KPMG Indian Media and Entertainment Industry
Report 2013
64
65
Distribution
The key challenge the Indian film industry is
dealing with is unity between all the stake
holders in the industry. If all the producers,
distributors and the exhibitors unite, then we can
have the collective power to negotiate with all
the vendors during production, marketing and
distribution stages. Also, we can form a common
platform to discuss matters with the government
to reduce/remove the various taxes, namely
service tax, entertainment tax etc. and provide
incentives for film making. This will reduce the
cost of production and marketing of our films
and increase the revenues from the theatres
resulting in a better bottom line.
- Aashish Singh
Vice President- Production,
Yash Raj Films
Many of the family-run production houses have started

moving away from being a one man army to developing
in-house producers and providing them with a platform
to produce films. Yash Raj Productions, for instance, has
begun launching its in-house producers under the Yash
Raj Films (YRF) banner. Going forward, movies will not
only be made by Aditya Chopra but by other in-house
producers as well, which is expected to almost double its
slate from the existing 10-12 movies per annum to almost
18-19 movies in a year.3
The industry has learnt to operate cohesively and
leverage each others strengths. During 2013, various
production houses forged alliances. Filmmaker Karan
Johars Dharma Productions partnered with Reliance
Entertainment to market and distribute four films; Gori
Tere Pyaar Mein, Hasee Toh Phasee, Ungli and Humpty
Sharma Ki Dulhaniya in the overseas market.4 Aamir Khan
Productions also teamed up with Ritesh Sidhwani and
Farhan Akhtars Excel Entertainment to co-produce future
projects.5
The last few years have been great for the

Indian film industry. The focus is shifting towards
developing content driven films where the story
is the hero. Corporatisation and increased
competition has brought efficiencies across the
entire value chain. Unlike before, production
function is now better organised and follow a
top down approach where cost of production is
decided first and rest of the things planned later.
Rising talent costs remain a concern for the
industry and Balaji is confronting it by nurturing
talent internally.
The studios are now adopting diversified marketing

strategies to promote their film - on one hand Amir Khan
starrer Dhoom 3 decided to almost go mute and let
the brand Dhoom do the talking and on the other Shah
Rukh Khan starrer Chennai Express went head on and
exploited various media platforms to promote the film.
On an average, an A-starrer film starts its marketing and
promotion activities 6 weeks in advance with a budget of
INR250-300 million while medium and low budget movies
try to create as much impact as they can with limited
budgets. It has been observed that with increasing media
costs a minimum budget of INR60-80 million is required
to run at least a 4 week promotional activity.6
The filmed entertainment space is in rapid

change mode, the success of movies, other
than a superb content, has now lot to do with
a detailed marketing and distribution strategy,
which is more systematic and continuously
evolving. Other than traditional marketing, digital
marketing is becoming a key element of the
overall strategy. There has been an increase
in the digital marketing spends for movies in
the year 2013. The number of YouTube hits at
the launch of movie trailer is now used as a
barometer of success for the marketing of the
film.
- Kamal Jain
Eros International
Television continues to be the prime platform to promote

a film followed by print and OOH. During 2013, rising
media costs across platforms led to a 20 per cent growth
in print and advertising (P&A) spends over 2012.6 The year
2013 saw introduction of a new advertising regulations on
television. As per the new TRAI regulation, broadcasters
will be constrained to carry 10 minutes of commercials
plus 2 minutes of channel promotions per hour which
has led to an increase in the ad rates by television
channels. The TRAI ruling has been a major cost driver
for production houses and has impacted medium to low
budget movies the most.6
Digital platforms are now the preferred platforms to
connect with the urban youth. Accordingly, digital
marketing budgets have witnessed a robust growth of
200 to 300 per cent while for big budget films spends
have increased in the range of 400 to 800 per cent.6 On
an average, a big budget movie will spend INR10 to 15
million on its digital marketing platforms.6
- Ekta Kapoor
Joint Managing Director and Creative Director,
Balaji Telefilms
03. Yash Raj widens umbrella, to begin new trend in Bollywood, 24 January 2014, Business Standard
04. Karan Johar ties up with Reliance Entertainment for 4 films, 10th October 2013, NDTV Movies
05. Ritesh and Farhan team up with Aamir Khan Productions, 26 Nov 2012, Times of India
06. Industry Discussions conducted by KPMG in India
Traditionally, print, television and OOH

were areas for significant media spends
for films, however online and mobile is
gaining importance because it is a medium
that offers significant engagement with
the target audience. Movies like ship of
theseus, marketed online, demonstrates
how film media strategies are evolving for
specific genres and audiences.
More than 65 per cent of Bollywood

audiences on the opening weekend are
under the age of 25, while family audiences
walk in only from the second week onwards
if the content generates great Word-ofMouth. Youth are driven more by star
cast, promos and music, than by the story
itself. This makes content secondary and
packaging more important for box office
success today. But true successes (such
as Bhaag Milkha Bhaag or Aashiqui 2) are
films which manage to marry packaging
with content, and thus sustain beyond just
the first week.
- Shikha Kapur
VP and Head of Marketing Studios,
Interactive & Youth and Movie Channels,
Disney India
- Shailesh Kapoor
CEO,
Ormax Media Pvt. Ltd.
Ship of Theseus - distribution and marketing case study

Brand and communication objective: Ship of Theseus (SOT) had
won awards at various international film festivals and was hailed as
a masterpiece by critics. Despite this, its producer Recyclewala Films
couldnt find distributors to release it. This is a predominant problem
for non-star cast, indie films. Therefore, filmmaker Kiran Rao and UTV
Motion Pictures decided to support the film.
It was critical that the marketing costs be kept low in order to ensure
profitability. Accordingly, SOT had a marketing budget that was onefifteenth the average amount spent on promoting a regular Bollywood
film. The challenge was to identify the target audience for such a niche
art house film and ensure there was no wastage in distribution i.e.
release the film in just the right number of theatres, in the right cities
and ensure occupancy levels remained high.
It was decided to release the movie in three phases and allow the
word-of-mouth build demand for the movie. The challenge was to
identify the right target cities and theater locations. Based on detailed
analysis of cinema going behaviors five cities were shortlisted. Then
the focus shifted to identify cinemas and cities where the movie would
be released in subsequent weeks.
Target audience: People who appreciate aesthetic and makes you
think cinema. Additionally, test the hypothesis that audiences for such
films dont necessarily just exist in affluent pockets of major metros.
Campaign: To break through the media clutter and get this film noticed
UTV Motion Pictures, Recyclewala Films and director Anand Gandhis
social media reach was deployed.
While it was initially decided to release the film in five metros, a
number of queries from fans based in other cities lead SOT to Crowdsource the release plan. A Facebook application called Vote for your
city was created. The app enabled people to vote to get the film
released in their city.
To add to the buzz, a special press conference was held where the
Vote for your city initiative was presented to digital journalists.
This was the first time ever that any studio restricted a press
conference to digital journalists and bloggers, thereby emphasizing
the focus on digital platforms.
Other Major Highlights
Google Hangout with Kiran Rao and Anand Gandhi on UTV

Motion Pictures YouTube channel
Special screening for film stars hosted by Aamir Khan resulted

in the movie getting rave reviews from celebrities on Twitter
Special screenings were held in major cities for prominent
bloggers and fans with high Klout scores
Bookmyshow and PVR carried movie banners on their
homepage, sent e-mailers to their database and posted updates
on their social media properties. All this was done in exchange
for their contest winners getting to meet the films director,
Anand Gandhi
Infibeam shipped SOT bookmarks to everyone who bought
books through their portal
Live chat on Yahoo India with Kiran Rao and Anand Gandhi with
the song Naham Janami premiering on the website.
Results
The demand measurement model enabled by the Facebook
application was a first-of- its-kind initiative in the Indian film
industry, which has now become an industry case study for how
niche/indie films should be marketed.
Social media enabled SOT to reach 2.2 million (estimate) fans at
no additional cost
The crowd-sourced approach resulted in SOT trending on Twitter
in India for 4 days during its release week
The SOT Vote for your city app got 5832 votes, reaching over
1.7 million people
The App resulted in the film being released in 24 cities, instead
of the original plan of 5 metros
The value of free media coverage for the SoT Vote for your city
tab is estimated at INR7.5 million
Social media enabled an optimal selection of theatres and
show timings, thereby resulting in an above average theatre
occupancy level
SOT earned INR20 million from 60 cinemas
The campaign got extensive online media coverage and
Lighthouse Insights rated it amongst the 30 most Interesting
Indian Social Media Campaigns Of Quarter III 2013.
Source: Disney India Studios
66
67
Exhibition
The year 2013 has been a great year for INOX
as all 3 revenue streams Box Office, F&B
and Advertising have seen a healthy growth.
Cinema in India has seen a sea change over the
years with audiences becoming increasingly
discerning, film makers experimenting with their
content and exhibitors luring in audiences with
unmatched service and latest technology. At
INOX we believe that the pace of expansion and
growth will only get better and we will continue
to bring in the best movie viewing experience to
our guests across the country.
The growth in domestic theatrical revenues can be largely

attributed to the growth in number of screens via growth
of the multiplex segment, coupled with increased ticket
prices and a steady supply of content across genres and
languages.
With metros and most of the tier I markets getting
saturated, the focus is now shifting to the tier II and
III cities which are experiencing rapid urbanisation
and greater economic growth. The industry achieved
approximately 90-95 per cent digitisation of screens,
and almost all commercially viable properties have been
covered.7 Digital technology is now enabling reaching
the unserved population which sits near the bottom of
the pyramid. The key advantages of digital technology are
affordability, security and timely access.
The distribution strategy for a film is dependent

on several factors such as the genre of the film,
the content, cost of the product etc. Also crucial
for the release of a film is the release date which
is a deciding factor after determining the right
release window keeping exams, festivals, long
weekends, other releases in mind. It is important
to gauge the target audience for a film and then
develop a distribution strategy.
- Nandu Ahuja
Senior Vice- President (Theatrical), Eros
International
Multiplexes, as of today, account for approximately 25

per cent8 of the total number of screens in the country
with a low screen density of 8 screens per million in
comparison with 117 per million in the US.9 Given the low
screen penetration, India has the potential to significantly
increase the number of existing multiplex screens in
the country over the next decade without causing an
oversupply of screens.
In 2013, the industry added approximately 150-200
screens7 with major growth coming from expansion of
multiplexes in tier II and III cities. Leading multiplex chains
such as PVR Cinemas (PVR) added 60 screens, Inox
Movies added 21 screens and Satyam Cineplex added
12 screens7. Growth of the multiplex industry is highly
correlated to the level of real estate development. Organic
growth of the industry is expected to be mostly through
green field investments as the industry does not perceive
value from converting single screens into multiplexes.
Accordingly, in the short run, organic growth could be
constrained by the bottlenecks created due to slowing
development of malls and commercial real estate a
potential result of Indias slowing economic growth.
- Alok Tandon
Inox Leisure Limited
Consolidation in the industry has led to a significant

improvement in the bargaining power of most
exhibitors. Industry discussions indicate another round
of consolidation in the next few years. The growth
of domestic theatricals can be attributable to both
improvement in occupancy levels, as well as growth in
average ticket prices (ATP).
Occupancy levels for major multiplexes players have
risen from approximately 23-27 per cent in 2011 to

more than 30 per cent in 20138. The exhibitors are
adopting differential pricing across weekdays and
weekends and maximizing footfalls across the week.
Average ticket prices have also grown over the years
from INR150-160 in 2011 to INR168-175 in 2013 for

leading multiplex chains.8 According to Ormax, the gap
between high-end multiplexes and regular multiplexes
is far more than the gap between regular multiplexes
and regular single-screens. 3D movies continue to
be priced at a premium of 15-20 per cent over regular
movies7.
Ticket price by theatre type (INR)

250
239
200
150
127
95
100
56
50
0
High-end
Multiplex
Multiplex
Source: The Ormax Bollywood Audience Report, 2013

08. The power of a billion-Realizing the Indian dream, FICCI-KPMG Indian Media and Entertainment
Single Screen
Low-end
Single Screen
Currently, an exhibitors revenue comprises of 70 per cent

of ticket sales, 20 per cent of food and beverages and 10
per cent of cinema advertising.10 While the proportion
more or less remains the same, the volume in absolute
terms goes up.
Cinema exhibition industry in India is going

through a paradigm shift and last couple of
years have seen significant consolidation in the
multiplex space. We expect 2-3 large operators
to drive bulk of future growth in this space in
India. Multiplex penetration in India is still very
low with only 18-20 per cent of total screens
in India being multiplexes, as compared to
most developed countries where multiplexes
constitute 85-90 per cent of total capacity. India
is seeing a shift in how people go to cinemas.
Single screens will continue to decline while
multiplexes will become more prevalent
in India.
- Nitin Sood
PVR Limited
Single screens continue to face challenging times

with many shutting down in 2013. Players are making
attempts to compete with multiplexes by improving the
movie watching experience. Most players are making
renovations around improving technology systems,
seating and air-conditioning, parking spaces, quality
of food and beverages and maintenance of clean
washrooms. All such initiatives have helped to bring back
the family audience back to single screen theaters.
The growth in the theatrical collections in India

will come from the increase in screens in tier
2 and tier 3 cities. The saturation of screens in
metros will lead to new markets being explored
for exhibition and newer audiences will flock to
cinemas.
- Gaurav Verma
Executive Director - Theatrical Distribution,
Studios, Disney India
10. Inox Investor Presentation- January 2014; PVR Exhibiting growth, UBS Securities India Private
Ltd, Feb 2014
Is consolidation the answer?
Alok Tandon
Inox Movies
A little over a decade old, the multiplex industry is going through its
most interesting phase. With expansion of multiplexes at its peak,
investments pouring in, and content at its all-time high in quality
and quantity, the industry is maturing gracefully.
Multiplexes blossomed and brought in the much needed
enhancement in the movie viewing experience. Over the years,
investments into the industry came in from different fronts. Big
corporate houses diversified and entered the multiplex industry,
entrepreneurs jumped onto the band wagon and international
players entered India to expand their existing business. For the
consumers, multiplexes became the new go to destination across
the country. Besides ushering in a top of the line, comfortable
and safe movie viewing experience for audiences, multiplexes
additionally became aspirational venues to spend time in. As malls
and shopping arcades sprang up, multiplexes became their most
integral anchors. However, this growth is just the tip of the iceberg.
While everyone is aware that we are a nation which produces
the largest number of movies and sells the maximum number of
tickets in the world, yet we are grossly under-screened. With a
screen density standing as low as 8 screens per million people and
the multiplex screen density even lower at 1.8 screens per million
people, the scope for this industry is huge, to say the least.
To grow at a fast pace, one has to grow organically as well as
inorganically. The first consolidation within the industry took place
in 2007 with INOX Leisure Limited acquiring Kolkata based Calcutta
Cinema Private Ltd. (CCPL). This helped in further strengthening
INOXs leadership position in the East. INOX followed this up
by acquiring Fame India Limited in 2010 thus giving it a strong
foothold in the West; PVR Limited also acquired Cinemax India
Limited in 2012. The reasons for these amalgamations may be
manifold: to increase foot print, to gain access to new geographical
areas or strengthen brands. However, it is clear that this is a
natural progression in the growth trajectory of this industry.
Consolidation has helped reap benefits for the multiplex operators
as also everyone associated with the industry. For the operators
there are immediate benefits in terms of larger sales volumes, a
wider consumer base as well as increased geographical coverage
besides obvious synergies in terms of economies of scale in
capital deployment/purchase, reduction in cost of operations,
better negotiation positions with vendors, rationalisation of cost
structures, etc . There are also advantages in terms of sharing of
best practices and being able to better engage in policy discussions
with authorities.
68
69
Film makers, producers and distributors, now have to deal with only
a few multiplex operators before they release their movies. These
exhibitors have become their one-stop destination. Advertisers
get greater reach and impact with national chains having a pan
India presence since these afford them a single window access to
multiple locations spanning the length and breadth of the country
for their national campaigns and yet also allow them to micro
target their campaigns to a specific location if need be.
Though amalgamation has helped the companies grow and
establish themselves faster, they have also developed organically
at a very aggressive pace over the years. As mentioned earlier,
being a grossly under-screened nation, the industry has a huge
potential to grow both organically as well as inorganically. Either
way, theres a vast scope in taking these aspirational destinations
to every movie-crazy citizen in the country.
With the advent of multiplexes, film content has also seen a seachange across the country. Film makers got a chance to experiment
with varied subjects and a new genre called the multiplex genre
of movies came into being. Regional movies today have a lot
more opportunity and a much wider release and reach afforded
to them by the multiplex chains. International studios have
entered the regional arena by dubbing their movies into various
Indian languages. Technology deserves a special mention with
multiplexes leading the digital charge with never seen before
picture quality as well as immersive sound experience. Technology
today has changed the entire movie going experience and it is only
going to develop further in days to come.
With two acquisitions (CCPL/Fame) in a little more than a decade
since its inception in 2002, INOX has come a long way. We
definitely believe that these two acquisitions were necessary for
the growth of the company and have helped us reach where we
are today. Now the question is what is our growth strategy for the
future? I believe that consolidation will continue together with
organic growth and multiplexes have to continue increasing their
footprint across the country. To aid this expansion, a huge help in
bringing in a single-window clearance of all necessary licenses
and permissions is required from the Government. As is common
knowledge, cinematic law which governs the various aspects of
this industry, varies from state to state. The industry will grow a lot
faster and bring in more benefits not only to the industry players,
but also to the overall growth of the country if there is a uniform
law.
The entertainment industry today is going through its most exciting
phase where multiplexes are concerned. With consolidation
and organic growth, the industry can well be one of the largest
contributors to the national exchequer in the years to come. It is
just a matter of time. After all, this country has only two religions
cricket and movies.
Disclaimer: Unless otherwise noted, all information included in this column/ article was
provided by Alok Tandon. The views and opinions expressed herein are those of the authors and
do not necessarily represent the views and opinions of KPMG in India.
Industry performance and projections

Film industry performance
2012-13
(YoY
growth)
CAGR
2013-18
Revenues (INR Billion)
2009
2010
2011
2012
2013
2014p
2015p
2016p
2017p
2018p
Domestic Theatrical
68.5
62.0
68.8
85.1
93.4
102.2
116.9
133.3
146.3
160.2
9.8%
11.4%
Overseas Theatrical
6.8
6.6
6.9
7.6
8.3
9.4
10.3
11.4
12.0
12.7
9.4%
8.9%
Home Video
4.3
2.3
2.0
1.7
1.4
1.2
1.0
0.9
0.8
0.7
-18.0%
-13.0%
Cable & Satellite Rights
6.3
8.3
10.5
12.6
15.1
16.1
18.4
20.9
23.0
25.2
20.2%
10.7%
Ancillary Revenue Streams
3.5
4.1
4.7
5.4
7.0
9.1
11.7
14.7
17.8
21.0
29.3%
24.7%
83.1
83.3
92.9
112.4
125.3
138.0
158.3
181.3
200.0
219.8
11.5%
11.9%
Total
The Indian film Industry has been witnessing significant

growth on the back of differentiated content, wider
release across digital screens and aggressive promotions
by production houses. The film industry is estimated to
be worth INR125.3 billion in 2013. The industry is heavily
dependent on domestic theatricals which contribute
more than 75 per cent to the industrys revenues. Factors
such as rapid urbanisation, penetration of multiplex in tier
II and III cities, increasing sophistication in production
and marketing of films and audiences receptivity to
differentiated content are together expected to help the
industry sustain its growth over the next few years and be
worth INR219.8 billion by 2018.11
There will be further consolidation in the

exhibition business and growth will be driven
by the multiplex growth in tier 2 and tier 3 cities
where the screen density is still very low. While
the multiplexes will provide a platform for
growth, the implementation of Goods and Sales
Tax (GST) is expected to be a game changer as
it provides greater clarity and transparency to
various film industry stakeholders.
Domestic theatricals
Theatricals continue to remain the main source of
revenues for the industry contributing contributing
INR93.4 billion to the INR125.3 billion film industry. Digital
technology, apart from securely delivering films in a cost
efficient and secure manner across the country, has also
helped cut revenue losses owing to piracy. Today, 80-100
per cent of films are distributed digitally vis a vis 50 per
cent physical prints in 201011. The industry has achieved
90-95 per cent digitisation of screens11. Wider reach and
coordinated release of movies has been a key revenue
driver for the industry. Digital prints cost one-fifth of
analog prints, leading to swift reach of movies across the
country at a much lesser price which has resulted in an
increase in the number of screens in which the movie is
released.
Increase in No. of screens
- Deven Chachra
Managing Director,
Satyam Cineplex
11. KPMG in India analysis based on industry disscussion
Source: Bollywood no longer talks of piracy; but ignoring dangers of online can be costly,
Economic Times, February 2013
Dhoom 3 trailer attracts huge advance booking, Business Standard, November 2013
70
71
Movies are now released on 3,000-4,500+ screens

across the country. Additionally, more consumers are
present to watch the films on the first day itself. Even
non A-starrer movies are now able to afford a nationwide
release through digital distribution. The industry has
moved away from delayed release of movies to same day
and date release of movies across its viewing centers
leading to shortening of box office window. In August
2013, Chennai Express became the fastest film to enter
the INR 1 billion club in just 4 days of its release and by
December 2013 Dhoom 3 broke previous records and
became the first film to cross the INR2 billion mark in the
first week of its release.12
In 2014, screen counts in tier II and tier III cities

will increase with the right kind of investment
mix as India is a hugely under-screened
market. Digitisation has turned the traditional
wisdom of huge 1000 seater cinemas on its
head and the age of compact 150-200 seater
cinemas will drive the exhibition industry. Along
with the INR200 Crore club films, niche and
regional cinemas will be the biggest gainers
going forward. The exhibition industry is
heading towards consolidation and an era of
transparency and increased corporatisation.
- Sanjay Gaikwad
Chief Executive Officer and Managing Director,
UFO Moviez
In an industry where change is a vital factor and there is a

need for new faces and stories from time to time. Director
Shoojit Sircar of Vicky Donor moved into the spotlight yet
again for his Indian political espionage thriller film Madras
Caf which won the hearts of audiences . Other movies
like Shorts, Bombay Talkies, ABCD -AnyBody Can
Dance, Kai Po Che, Lunchbox, B.A. Pass and many
others, with similar unconventional themes, proved to be
successful at the box office despite not being mainstream
movies. Directors, not afraid to experiment with a range
of subjects, can now expect their films to be accepted
by the audiences, where content of the film matters the
most.
Thanks to the power of multiplexes , content led

stories are a sizable figure of the total revenue
mix. The beauty of content led cinema is that
unlike blockbusters they are not high-cost
projects, and hence a decent run at the box
office will result in commercial success.
- Jay Sampat
Group Strategy Head,
Balaji Telefilms
12. Dhoom 3, Chennai Express, Krrish 3, The Lunchbox: Highest grossers and trend setters of
Bollywood in 2013, DNA, December 2013
It was also a Year of Sequels for the Hindi film industry

with 9 sequels released during the year. The year kick
started with the release of Race2 in January 2013
and drew to a close with the release of Dhoom3 in
December 2013.
Chennai Express- Marketing case study

Chennai Express was one of the highest grossing movies of 2013
and was hailed for its marketing campaign which involved a 360
degree marketing campaign with several innovations. The details
of the marketing campaign are stated below:
Events/PR/Tie-up
Interactive Train Bogie: Large standees resembling a real train
bogie with TV screens as windows were created. The lead pair
from the film was seen interacting through the windows; present in
all major airports across the country, in addition to cinema theatres
and malls
IPL Association: Promos were shot featuring actor Shah Rukh
Khan (SRK) inviting people to watch the IPL finals which play across
the Sony network channels as well as a special appearance by SRK
on Extra Innings on the finals of the IPL
Music Launch: Innovative video brochures containing film
content was given out at the music launch of the film. Asus
launched their new transformer laptop at this event
City Visits: Massive crowds with numbers ranging from 30,000 to
150,000 came to see the movie stars SRK and Deepika Padukone
in Bhopal, Ahmedabad, Kolkata, Jalandhar, Delhi and Chennai. A
radio tie-up ensured buzz and contest winners came in Chennai
express avatars to meet SRK
Media Alliances
A weekend GEC promotion for the movie was created on three
leading reality shows on prime time. SRK, Deepika Padukone
and Rohit Shetty made an appearance on Comedy Nights with
Kapil on Colors, DID Supermoms on Zee TV and Jhalak Dikhlaja
on Colors. The team also promoted the movie on Tarak Mehta
ka Oolta Chashma, Indian Idol Junior and appeared on soaps
Madhubala and Diya aur Baati Hum
The Brunch Night Out event in Delhi with a discussion on all good
things in life with SRK and Deepika Padukone was supported by a
print campaign on Hindustan Times. SRK also visited the Rajasthan
Patrika concerned communicator awards in Mumbai. ABP and
the Bhaskar group helped sponsor the Kolkata and Bhopal visit
respectively
Leading TV channels and networks Aaj Tak, ABP Group, Zee
Cinema created a co-branded campaign supported by mainline
advertising in print. The media worth of these alliances is
estimated to be around INR 200 million
Post Release Campaign

Rakshabandhan special: A special offer was released on
rakshabandan wherein 1 ticket would be given free on the purchase
of 2 tickets. The offer created tremendous buzz and more than
100,000 free tickets were given out by the end of the day.
The song Lungi dance giving tribute to the legendary South Indian
actor - Rajnikant gained immense popularity from the launch.
Digital
Website and browser based games: A Chennai Express
website was created, which was completely integrated with social
media sites. The website also had about 8 different games, which
were also adapted for use on mobile and social media sites
Trailer Launch Innovation: Chennai Express was the first
Bollywood movie which used Twitter to engage users and
give them live redemption, users were required to Tweet their
comments to make a train move over a virtual rail line from Mumbai
to Rameshwaram. The more the tweets, the faster the train moved
and as soon as the train reached Rameshwaram, the trailer was
released
CE Mobile Game: Chennai Express: Escape from Rameshwaram
was created as an endless running game where users take control
of Rahul (Shah Rukh Khans character in Chennai Express) while he
runs and tries to escape from Rameshwaram, facing goons and a
variety of obstacles. The game crossed 3 million downloads across
platforms since its launch
Karaoke App: The Social Karaoke app was created for users to
sing a song from the movie, share the score on Facebook and also
dedicate the songs to their friends
Brand Associations
The brand associations for the movie included. those that have
SRK as their brand ambassador - Nokia, Lux, Emami Fair &
Handsome, Nerolac, Videocon and others such as Mc Donalds,
Genus Inverters, Lovely Professional University, Best Rice, Reliance
Digital, Asus, Lawman, Lenskart, Baskin & Robbins. The total
media worth from brands was close to INR 300 million
Source: Disney India Studios
Regional markets
The four southern markets including Tamil, Telugu,
Kannada and Malayalam continue to dominate the
regional film market with Tamil and Telugu being the
largest language markets. Tamil cinema produces
more than 250 movies per annum.13 In 2013, the two
biggest box office successes for the Tamil industry were
Vishwaroopam and Arrambam collecting INR2 billion
and INR1 billion respectively. Other movies such as
Singam 2, Soodhu Kavvum, Raja Rani, Varuthapadatha
Valibar Sangam and Theeya Vela Seiyyanum Kumaru
successfully did business of above INR500 million each,
with additional revenues coming from international
markets such as Australia, Malaysia and United
Kingdom.14
The Telugu film industry, witnessed wider release, higher
occupancy and greater success. Attarintiki Daredi was
the biggest movie release of 2013. The movie earned
revenues of almost INR1.87 billion across 1200 screens
with an occupancy rate of 100 per cent across several
screens in Andhra Pradesh. The spectacular performance
was despite facing piracy issues because of which the
movie had to be pre-released.15
In terms of system, processes and global best

practices, regional markets are 10 to 15 years
behind Bollywood. However, in terms of cinema
as a passion, and position of cinema in day to
day life of common individuals and society as
a whole , films of regional markets (especially
those in the south) are much stronger than
to Bollywood films. Sheer per centage of
footfall numbers of audience in theatre are
disproportionately high in case of Tamil and
Telugu films. Theatre infrastructure needs to be
further improved in regional markets to further
increase absolute theatrical contribution.
- Shibashish Sarkar
Reliance Entertainment
Other regional language movies have shown a significant

uptrend with several small budget movies with new
artists and relevant topics doing extremely well and
establishing a trend. The number of small budget movies
has doubled while the big budget movies has remained
more constant. These smaller films release in 30-50
screens in the first week and add screens over the next
few weeks to peak at 150-250 screens.16
Other prominent regional markets are Bhojpuri, Marathi,
Punjabi, Bengali and Gujarati. The Marathi industry
is estimated to have grown by almost 50 per cent.16
Duniyadari has been the first Marathi movie to collect
INR250 million17 at the box office. The Punjabi industry
is estimated to have grown by 10-15 per cent16 with
movie such as Jatt and Juliet 2 earning more than
INR200 million18 at the domestic box office. However,
the regional industry is heavily dependent on theatrical
revenue approximately 95-97 per cent.16 The same
trend as witnessed in Hindi cinema i.e. wider distribution
and dependence on opening weekends is also evident
in these markets even as theatrical revenue climbs. For
example, the first day box office collections of Bengali
movies breached records. In August, Jeet-starrer Boss
(a Bengali film), produced by Reliance Entertainment and
Grassroot Entertainment, collected INR 7.25 million on
the first day19, while in October 2013, Mishawr Rahasya
(Bengali) collected INR 6.5 million, Khiladi INR 5.5 million
and Rangbaaz INR 7.5 million.20
Regional cinema continues to face challenges in building
scale, developing broader markets through greater
distribution and generating non-theatrical revenue.
13. Journal of Film Chamber, Feb 2014

14. Kollywood Box Office Hits of 2013, KollyInsider, December 2013
15. http://www.apherald.com/Movies/ViewArticle/44149/Industry-Hit--Attarintiki-Daredi-reaches-100Days-Successfully-Trailer/, http://www.ibtimes.co.in/articles/509988/20130930/attarintiki-daredi-boxoffice-collection-pawan-baadshah.htm, http://www.teluguone.com/tmdb/news/attarintiki-daredi-40days-collections-en-27213c1.html
17. http://www.boxofficecapsule.com/collection/4th-Weekend-Box-Office-Collection-Of-Marathi-FilmTIMEPASS-2117 accessed on 10 Feb 2014
18. http://www.punjabicinema.org/highest-grossing-punjabi-movies
19. Corporates join Tollywood bandwagon, Bengali film budgets rise to about 5-6 times, Economic
Times, 2 Jan 2014
20. Boxofficecollections.com
72
73
Hollywood
Due to almost 100 per cent digitisation of
screens in Bengal, we are seeing a significant
improvement in collection and decline in piracy;
integrated production, distribution and exhibition
models are also coming into vogue especially
in Tier III and IV towns and the prospect of
Bangladesh market opening up is encouraging.
However, the Bengali film market continues to
suffer from sharp divide of what content works
in urban (Kolkata metro) and non-metro markets.
Quality films are still less in number , we need
more regular producers and more talent pool to
combat Bollywood and Hollywood film.
Until few years back, Hollywood was considered as

an urban phenomenon and the movies were released
for English speaking audience. However, much has
changed over the last few years, most theatres are now
DCI compliant allowing movies to be released across
a wider number of screens. Iron Man 3 was released
across more than 1000 screens (in four languages) in
comparison to historical average of 250-300 screens.21
Franchise films with high recall value and high quality
visual effects continue to perform well in India. The share
of Hollywood is small in the overall domestic theatricals
market however, players are not complaining as movies
are continuing to draw footfalls. During the year, Oblivion
had an occupancy of 25-35 per cent, The Great Gatsby
3D had 30-40 per cent while for the best performing
movies such as Gravity and The Conjuring the
occupancy level ran up to 50-60 per cent.22
- Himanshu Dhanuka
Director,
Eskay Video Private Limited.
Top Hollywood films released in India 2013

Titles
Realease Date
Genre
Iron Man 3
26-Apr-13
Action/Sci-Fi/Thriller
1054
667
Fast & Furious 6
24-May-13
Action/Crime/Thriller
828
573
Man of Steel
14-Jun-13
Action/Adventure/Fantasy
706
370
Gravity
11-Oct-13
Drama/Sci-Fi/Thriller
195
363
The Wolverine
26-Jul-13
710
281
G.I.Joe: Retaliation
29-Mar-13
Action/Adventure/Sci-Fi
528
230
Thor 2: The Dark World
08-Nov-13
600
227
The Conjuring
02-Aug-13
Horror/Thriller
128
222
World War Z
21-Jun-13
Action/Drama/Horror
570
177
A Good Day to Die Hard
22-Feb-13
Action/Crime/Thriller
678
124
Screens
Total GBO* (INR million)
Source: Kinematograph Renders Society

Note: *Up to 5 Weeks
Overseas theatricals
Overseas theatricals witnessed a 9.4 per cent increase
from INR 7.6 billion in 2012 to INR8.3 billion in 2013. While
the overall revenue generated has increased, the overall
contribution is 7 per cent of the total revenue. Typically,
only a few star driven movies have witnessed theatrical
success in the overseas market and the films are normally
watched by persons of Indian origin. In most countries
where theatrical audience is weak, films are distributed
directly on home video platform.
21. Iron Man 3 to get biggest Hollywood release in India, 25 April 2013, Hindustan Times
22. Hollywood losing screen fight with regional, Bollywood flicks, 06 February 2014, Times of India
North America, U.K. and the Middle East are the key
markets and together they contribute about 80 per cent
to the total overseas revenues.23 The Middle East market
has showcased an impressive Y-o-Y growth of 30 per
cent while the U.S. market grew at ~10-12 per cent.23 In
U.K. the Indian movies are struggling to connect with the
third generation of Indian diaspora leading to a decline in
collections from the region. The industry is experiencing
mushrooming demand from new markets such as Japan,
South Korea and Peru where films are distributed with
subtitles in the native language of those markets.23
It has been observed by the industry that content driven

films such as 3 Idiots perform well in such markets,
while masala films are not appreciated by the audience.
Shah Rukh Khan continues to be the most popular actor in
such markets while Ranbir Kapoor is emerging as a choice
of the younger generation. In 2013, some of the biggest
successes were films such as Dhoom 3 and Chennai
Express which garnered box office revenues amounting
to USD27.6 million and USD18.8 million respectively.24
During the year leading production house Yash Raj Films
entered into a partnership with the Nikkatsu Corporation,
a 100 year old Japanese production and distribution
company, to increase the number of Hindi movies
accessible in Japan. The partnership has resulted in the
release of films such as EK Tha Tiger, Don2, 3 Idiots,
and Jab Tak Hai Jaan across 9 major cities in Japan
including Osaka, Kyoto, Sapporo and Kobe.25
VPF fee (Approx USD1500-2000) charged by

international cinemas in the key markets of
North America, U.K. and Australia is a prohibitive
cost for independent and regional films. This
is potentially restricting the reach of Indian
independent and regional cinema in theatres for
overseas audiences. Day and date release on
VOD platforms could be a potential solution to
help independent and regional films from India
to reach overseas audiences in a cost effective
manner and generate revenue for these films.
- Mohit Mehra
Cinema Capital Venture Fund
Cable and Satellite

Cable & Satellite (C&S) rights form a major chunk of
revenues for film producers and contribute almost 12 per
cent to overall industrys revenues. C&S revenues saw a
20.2 per cent increase from INR1,260 million in 2012 to
INR1,510 million in 2013.26 Going forward, the industry
expects less aggressive growth in acquisition price of
C&S rights and a more rationale box office success
linked movie acquisition criteria.27
During the year, average C&S rights for high budget
Bollywood movies were sold at an average of INR 400500 million compared to INR 300-400 million in 2012 27.
Sony Pix signed a deal with Metro Goldwyn Mayer
(MGM) Studios to provide its English movie channel
access to Hollywood hits like Skyfall, The Hobbit and
the future remake of Robocop. It also has exclusive
deals with Universal, Paramount, Lionsgate, Reliance
Entertainment and PVR.28
24.
25.
26.
27.
28.
29.
30.
Box Office India, boxofficeindia.com accessed on 5th March 2014

Trying to create demand for Indian films in Japan, 08 March, 2013, Economic Times
KPMG in India analysis
Sony Pix inks 3 year deal with MGM, 30 April 2013, Economic Times
Colors, Karan Johar sign 12 film deal for next 4 years, 16 Dec 2013, Economic Times
Shemaroo Entertainment inks pact with Viacom18 Motion Pictures, The Economic Times,
November 2013
More of the same will no longer work for the

Indian audiences this has been the key lesson
learnt in 2013! The Theatrical business continued
to exhibit strong underlying growth which augurs
well for the future. A lot of strong content based
mid-segment movies performed well at the box
office. Growth in the digital theatrical distribution
platform has been an important enabler in
reaching a wider audience base through an
increase in the number of screens.
- Vijay Singh
Chief Executive Officer, Fox Star Studios
With almost 50 per cent of box office collections

depending on the first three days, importance of
pre-release marketing cannot be negated. During
the year we have seen some extreme marketing
strategies with certain A-lister movies not
spending any money on the marketing of their film
to others going all out on their marketing spends.
On an average, P&A spends for the industry has
increased by around 20 per cent due to media
costs going up y-on-y. As a trend we are seeing
digital marketing fast emerging as an important
platform and the digital budgets are finding a
decent outlay amongst the overall spends and
have increased by close to 100-150 per cent from
their previous allocations.
- Vivek Krishnani
India - Head of Distribution, Marketing and
Syndication, Fox Star Studios
Records were set when Viacom 18s Hindi entertainment

channel Colors signed a multi-layered, performance linked
agreement with Karan Johars Dharma Productions for 12
films over the next 4 years estimated at INR 3.5 billion.29
Marginalisation of Home video segment

The contribution of home video revenues to overall
industry revenues is extremely low (~1 per cent). This
segment witnessed a decline of 18 per cent from INR1.7
billion in 2012 to INR1.4 billion in 2013.26
Home video segment as a revenue stream has been
marginalised due to consumption shifting to digital
platforms. Home videos are now being released much
earlier for most films Overseas home videos release in
~2 weeks while domestic home videos release in about a
months time. Further, the revenue generation potential of
home videos is not very lucrative and ranges up to INR10
million for an A-starrer film.27
During the year Shemaroo Entertainment inked an
acquisition deal with Viacom18 Motion Pictures for
exclusive video rights for a pipeline of blockbuster movies
released in 2013 and a few unreleased titles. The deal
included video rights for Hindi films such as Bhaag Milkha
Bhaag, Bombay Talkies and Madras Caf; Marathi and
Bengali movies.30
74
75
Ancillary Revenue Streams

Ancillary revenue streams are increasing their share in
the overall revenue pie. This segment witnessed 29.3 per
cent increase from INR5.4 billion in 2012 to INR7 billion in
2013.31 Internationally, digital revenues play a significant
role in regions where films do not witness a theatrical
release. Revenue sharing between content providers
and platforms stands at 70:30 in most scenarios.32
Music rights contribute 2 per cent to total film industrys
revenues with big budget films selling their music rights
for a massive INR70-100 million.33
Licensing and Merchandising: The licensing and
merchandising market in India is still at its nascent stage.

The growth drivers for the market is expected to be
consumer awareness, distribution network, technology,
social media, e-commerce, reduced piracy and movie
franchises, which together can drive demand for licensed
merchandise. Film merchandise in general is being
bought by the youth in India depending on factors such
as value for money, brand value, style, trend and star
cast. The ease of access to find these products is also
important, and today they can conveniently shop for these
products.
2013 has been a better year for the merchandising of

Indian films. Historically, there was little or no revenue
from merchandising. However, the trend is beginning to
change with movies such as Dhoom and Krrish focusing
on building franchise properties and paying attention to
merchandising as a promotional and revenue stream.
Filmkraft Productions (Krrish 3) developed a merchandise
collection that was focused more on a younger audience
including apparel for children, toys, school gear, candy, ice
cream, donuts, home furnishing and fashion accessories
that ran into a total of 400 products ranging in price from
INR50 to INR3500 retailing across 8000+ stores, both
standalone and larger chains such as Lifestyle, Crossword
and Hypercity.34 It also tied up with Graphic India and
Hungama Digital along with Carving Dreams to launch
original digital comic series and comic magazine called
Krrish: Menace of the Monkey Man.35
The work for the merchandising programme for Dhoom
3 was started 18 months before the launch of the film
where partners were identified on the basis of product
utility and fit with the film. The major target audience for
the products was the youth, and hence products were
developed to match their sensibilities. Another critical
factor was the distribution strength of the partners in
order to make all the products easily available. Mattel
distributed products amongst 2,000 distribution outlets
and created a buzz about the products online. Dhoom
3 partnered with 20 marketers to launch over 200
merchandise items priced between INR70 to 9,000.36
31.
32.
33.
34.
35.

Business economics of Chennai Express, Indicine, November 2013
Bollywood learns new tricks: Merchandising here to stay, The Sunday Guardian, November 2013
Graphic India and Filmkraft partner to launch Krrish comics, 24 September 2013, Indiantelevision.
com
36. Katrina Dolls and Aamir Khan bikes herald Bollywoods steps into a new revenue stream,
Economic Times, December 2013
The production house had two in house designers

ideating on the products and developing a broad range
of images based on various elements of the movie.
They provided licensees with a considerable amount of
creative material for the manufacture of products. Dhoom
3s mobile game exceeded over 10 million downloads,
making it one of the most successful Indian produced
games. Many other products such as D:3 tablet, phones ,
dolls, utility products, accessories also received a positive
response.32
Merchandise partnerships for Dhoom 3

Partner
Dhoom 3: Merchandise offering
ICEX Electronics
ICE created an innovative range of electronic

gadgets inspired by the movie theme
Mattel
Mattel created limited edition collector dolls

of lead actor Aamir Khan and actress Katrina
Kaif, Hot Wheels die-cast replica of the
bikes used in the movie, a range of racetrack
sets, a set of Dhoom 3 UNO cards and a
Barbie Kids Apparel range inspired by the
Dhoom franchise
Mountain Dew
Started a promotional offer where

consumers would have a chance to win a
BMW motorcycle
99 Games
Developed a bike racing game on mobile

platform. The game achieved over one
million downloads
llyXpress
Greeting cards, gift wrapping papers and

calendars featuring Dhoom 3 music, vibration
effects and fiber optic light technology
CEAT
Limited edition Dhoom 3 based tires have

been marketed by the company
Orosilber
Created a line of fashion accessories for men

including pendants, rings, wallets, bracelets,
dog tags, belts, key chains, tie pins and
cufflinks.
Collectabillia
Developed a range of fashion bags, sling

bags, hats, USB sticks, hat magnets, caps,
bandanas and other accessory products.
Classic Stripes
Developed a line of Dhoom 3 bike decals
Nightingale
A range of Dhoom 3 stationery - diaries and

notebooks that feature graphics based on
the movie
Bombay Dyeing
Dhoom 3 branded bed linens, cushions and

bath linens
Divani
Dhoom 3 clown theme scarves
Archies
The retailer developed exclusive range of

Dhoom 3 inspired paper stationery products
that includes photo albums, calendars,
posters, autograph books and more
LINE
Dhoom 3s official account and sticker for the

LINE mobile application
Steelbird
Dhoom 3 inspired helmets for bikers
Parksons
Dhoom 3 playing cards
Vox Pop Clothing Dhoom 3 inspired t-shirts for the youth

Source: Yash Raj Films launches Dhoom:3 Merchandise, Indiawest, November 2013
Merchandising in India, however, still awaits the holy grail

of organised retail. Organised retail is a critical channel
for the growth of this business and the merchandise
segments fortunes will grow in tandem with this channel.
Monetisation of content on digital platforms:

Content consumption on personal screens is expected
to rise significantly with the advent of 4G. Developing
an appropriate subscription model and curated content
are necessary for effective digital monetisation. With
consumers becoming accustomed to free content,
monetisation of online media assets remains a challenge.
While digital revenues are still very small, the industry
is not discounting their future potential. The industry is
making investments and getting its act together to take
advantage of the future opportunities.
Faster networks (4G) and smarter devices

will lead to an explosion of rich media content
consumption on digital devices. In India, the
primary access device to the Internet is the
mobile phone and that will increasingly be used
as an entertainment device to watch videos and
play games. As producers of content for digital
platforms, at Rajshri we recognise the fact that
video platforms like YouTube have no geographic
boundaries and our videos are viewed by a
global audience. The world is flat on platforms
like YouTube. This ups the ante significantly in
terms of the quality of content programming. We
have to benchmark ourselves against the best
in the world and not the best in India. We also
have to ensure that our content is relevant for a
global audience. Producing content in English
language is the first step in that direction.
- Rajjat Barjatya
Rajshri Entertainment Private Limited
One of the drivers in the growth of C&S rights

acquisition prices is the bundling of ancillary
rights which includes the digital rights along
with the C&S rights. However, players whose
main focus is not digital distribution, may not
be able to effectively monetize the digital rights
of movies which ultimately may result in a lost
opportunity for the industry.
- Hiren Gada
Director,
Shemaroo Entertainment Ltd.
76
77
VOD platforms in India

VOD Platforms
Itunes
Google Play
store
Ditto TV (Zee)
Box TV
Content Library
Movies, TV shows, music, games,

books, podcasts
40,000+ movie titles and 190,000+ TV

shows
Movies, TV shows, games, books in

English, French, Spanish and Hindi
50 TV Channels available (Entire Zee

Bouquet, Sony Entertainment, BBC etc.)
Library of ~3000 movies
Movies across genres and all major

Indian languages plus English and
German
Carries classics (Bollywood and

Hollywood)
Catalogue includes Bollywood and

Hollywood content, classics and
contemporary movies, independent
films (short films)
Content agreement with Sony, Disney

India and Shemaroo; also streams IPL
(Times Internet)
Big Flix
(Reliance)
Lukup
Online streaming of over 2000 movies

in 15+ languages by genre and year of
release
Eros Now
(Eros
International)
Spuul
Source: Company websites
Content library includes Movies, Music,

Sports, News, Lifestyle, Kids and
interactive services such as shopping,
education and advertising.
Pricing
Distribution
Standalone prices for each download. Available for viewing on any PC/
Some are free while some are paid
laptop and all major mobile/
tablet platforms with iOS
Standalone prices for each download. Available for viewing on any PC/
Some are free while some are paid
laptop and all major mobile/
tablet platforms with Android
Available for viewing on PCs
and all major mobile/ tablet
platforms
TV Channels Monthly Subs: 3 for

INR 49; 7 for INR 99; All for INR
129
30 Movies a month: INR 49
30 TV Serials a month: INR 49
Freemium model; Part of content

available free (ad-supported);
Premium content is charged
Unlimited streaming of movies at

Rs 199/month
INR 249 - 1 month
INR 599 - 3 months
INR 999 - 6 months
INR 99 - 7 days trial

Stream to multiple devices through platforms
the Lukup gadget

platforms

platforms
Initial device cost is INR 7,000
Contemporary Bollywood content
Movies and music videos only
Audio tracks, music videos, and

trailers can be viewed free of cost
PC, and iPad via the ErosNow

App
14 day trial period, and a

membership fee of INR 270
(USD4.99) thereafter for premium
pack
Eros Now iPad app supports

TV connectivity via the apple
AirPlay feature
Movies on rent at INR 110

(USD1.99)
Available on PC
900 movies and ~300 TV titles
INR 250 -1 month
Movies across genres and all major

Indian languages
INR 50 to INR 150 per rental
Partnered with Viacom18 s IndiaCast

and YRF to host their content
There is a need to create customised targeted

content for digital consumers. It is age and not
economic strata which is defining consumption
on digital platforms. Digital consumers primarily
lie in the 13-45 age group and are willing to
pay money for high quality content. India has
146 million cable subscribers paying monthly
subscription fee for entertainment the 13 to 45
years olds will pay similar amounts for online
video viewing or digital content/entertainment
going forward. To best monetise content,
content providers will have to start creating
separate Channels/Apps Brands on the Internet
and mobile either using YouTube or other
independent fat pipes for online
video viewing.
In cinema advertising is worth between INR10

20 billion if you get the metrics right. In United
States of America the ad rate for theaters is 4
times that of a premium TV ad spot while in India
the ad rate for theaters is 1/3rd that of a basic
TV ad spot. Cinema advertising had traditionally
been affected by the fragmented nature of the
exhibition industry, the inherent lack of proof
of play out, high logistical costs associated
with delivery and projection of ad-films which
has now been addressed through networked
digitised screens operated by digital cinema
integrators like QUBE & UFO.
- Senthil Kumar
Founder Director,
Real Image
- Gautam Patel
Managing Director,
Zodius Advisors
Sale of music rights:

In-cinema advertisement:
The size of the in-cinema advertising market is estimated
to be INR3.9 billion in 2013 37. The growth for in cinema
advertising is no longer coming just from local advertisers
but from large national advertisers.
Digital Cinema provides significant benefits to the
advertisers which include:
No Additional Prints In case of traditional in-cinema
advertising, each theatre required a separate print,

but digital cinemas require only one print and the
advertisement can be played in any number of theatres
Multi Lingual Ads Digital cinemas allow advertisers
to play a single tape in different language commercial

across different states as per the linguistic
requirements of target audience
Quality of the commercial remains unaltered
irrespective of the number of airings as compared to

traditional system where the print had a restricted life
Transparency- Electronic logs are provided to
advertisers for each spot played with digital cinema
So far, media spends were skewed towards television

and print as advertising platforms leading to rising
threshold limits to achieve minimum impact. The rise of
digital cinema is transforming the positioning of Cinema
as a media touch point by establishing credibility and
traction in the advertisers and media planners minds and
budgets. Inclusion of cinema in a media plan now has the
potential to deliver effective reach and a robust Return on
Investment for media spends across categories.

38. Chennai Express is fastest 100 crore grosser, Business Standard, August 2013, Dhoom 3 vrooms
past box office records, Business Standard, December 2013
39. Hungama becomes Bollywood Gateway for music providers, Bloomberg, July 2013
During the year A starrer movies such as Dhoom 3 and

Chennai Express sold music rights at INR90 million and
INR70 million respectively.38 The music rights for big
budget films are sold outright to music labels while in
the case of certain smaller films the music labels did a
revenue share with the production companies.
The music labels then further sell these rights on multiple
platforms including mobile phones, music channels, radio
stations, physically and digitally. While the physical sales
of CDs have significantly declined digital revenues from
the sale of music is still growing.39
78
79
Key themes
Unconventional themes
Perhaps Indian cinemas biggest success story this year
was Ritesh Batras The Lunchbox. Five years in the
making, it started off as a documentary and was funded
by eight investors from across the world. The movie
wowed audiences and dazzled critics at the Cannes
Film Festival in May 2013, where it premiered in the
International Critics Week side category. It had a good
start in first weekend in India with about INR110 million
coming in the 1st week of its release with a huge INR70
million coming in the first 3 days. The business of the
first three weeks was INR200.9 million40 and the fourth
weekend would have added INR4-5 million net. During
the year, smaller, content driven films continued to find
support from large studios like Viacom 18 (for Madras
Caf), Excel (for Fukrey) and Disney India (for ABCD).
Today the industry needs unique platforms

that create a balanced and inclusive growth in
the film sector and aligns the independent film
sector with the global film fraternity. The growing
participation at the Film Bazaar is a manifestation
of the attractiveness of the diversity inherent in
Indian and South Asian Cinema. The 7th edition
of the event saw close to 831 delegates from
36 participating countries from a merely 204
delegates from 18 countries in 2007.
- Vikramjit Roy
GM- Executive Producer & Head Marketing
NFDC
Hollywood meets Bollywood

Consumer preferences are changing rapidly.
Todays audience, especially the youth, are
demanding high-quality content driven movies
and it is up to the producers to raise their game
and do so in a financially prudent manner.
- Vikram Malhotra
Founder and Chief Executive Officer,
Abunduntia
However, it is a constant struggle to make unconventional

movies in contrast to the mass market entertainers
with high budgets. These movies look for a platform to
reach the niche audience. These unconventional movies
are either studio funded or crowd funded. For example,
movies like Madras Caf, Lootera, ABCD were funded
by studios and big production houses like Viacom 18 or
UTV Motion Pictures. Kannada writer-director Pawan
Kumars Lucia was backed through crowd funding and
managed to raise INR750,000 from 110 investors. It has
since won accolades at international festivals, got an allIndia release, turned a profit and has been acquired by Fox
Star Studios (for Hindi language rights). Many, however,
did not even have a budget as big as Lucias. Kenny
Basumatary made the Assamese action-comedy Local
Kung-Fu in under INR100,000 and nearly half of it went
into hiring a camera. Using amateur actors who were
martial arts students and locations which didnt require
shooting permission, the movie managed a pan-India
release.
40.
41.
42.
43.
The Lunchbox does well at the Box Office, 15th October, 2013, Box Office India
Bollywood Stars in Hollywood Movies, 5t September, 2013, Zoom TV
Bollywood is the Buzzword among Hollywood actors, Hindustan Times, 22nd November, 2013
Industry discussion conducted by KPMG in India
Many Bollywood stars have started heading westwards

for featuring in Hollywood movies. The trend though
new, is fast gripping the Indian film industry. Amitabh
Bachchan, in his over four-decade-old acting career,
featured in a Hollywood film - The Great Gatsby - for the
first time. It was his first 3D film as well. Priyanka Chopra
lent her voice for an Asian character in an animation
film, Planes and her second international music single
Exotic was also launched earlier this year. On the
other hand, Swedish actress Elli Avram and Australian
actresses Kristina Akheeva and Rebecca Breeds made
inroads into Bollywood this year with Mickey Virus,
Yamla Pagla Deewana 2 and Bhaag Milkha Bhaag
respectively. Anupam Kher appeared in Silver Linings
Playbook as an affable therapist for Bradley Cooper
whereas Shabana Azmi and Om Puri starred in The
Reluctant Fundamentalist alongside Kate Hudson and
Liev Schreiber. Bollywood actor Irrfan Khan has starred
in several Hollywood movies like The Namesake,
New York, I Love You, A Mighty Heart, Slumdog
Millionaire, The Amazing Spiderman and Life of Pi, as
well as in the HBO series In Treatment.41 On the other
hand, Hollywood actors such as Sharon Stone, Kristen
Stewart, Jackie Chan, Kim Kardashian, Daniel Radcliffe,
Julia Roberts, Brad Pitt and Jean-Claude Van Damme
have showed interest to work in Bollywood movies.42
Going forward, the industry expects a greater interaction
between the two industries.
After multiplexes, its time for megaplexes

Continuous innovation and technology evolution have
been the key drivers of the exhibition industry. After PVR
pioneered multiplexes in India in 1997, several players
such as Inox Movies, Fun Cinemas, Big Cinemas and
Cinepolis have made inroads in the industry. We notice
premium multiplex formats such as the PVR Directors
Cut and other entertainment formats which include
gaming and bowling.in a bid to attract audiences. Certain
players are now developing megaplexes with 11-15
screens capable of showing 60-80 screenings per day.
Such megaplexes would be built at an average cost of
about INR 20 to 25 million per screen and would have a
capacity of 2000 to 2500 seats.43
State incentives for film industry in India

With the number of movies releasing in every
language increasing every year the challenge
for exhibitors is to showcase diverse content
effectively and successfully. Megaplexes
allow a greater flexibility in programming and
an opportunity to showcase a wider range of
content. Another trend noticed is that the movie
going habit has gone up from 3 movies a year to
10 movies a year and the audience is maturing
to appreciate the script of the movie rather than
just big stars.
- Devang Sampat
Business Head-Strategic Initiatives,
Cinepolis
Megaplexes are apt for a country like India where it

would give freedom to tap and grow regional markets
such as Telugu, Tamil, Marathi, Gujarati, Bhojpuri and
other regional movies and give them space on the larger
screens along with Hindi and English movies. It would
also provide a fair opportunity for small and medium
budget movies to release across various theatres and
multiple screens.
Focusing on Tier II & Tier III consumers

With the focus now shifting to tier II and III markets,
exhibitors are constantly exploring ideas to target the
consumers. For instance, in order to gauge the actual
potential of its online booking portal, BIG Cinemas
developed an exclusive offer for its customers in tier II and
III markets. Accordingly, BIG Cinemas offered 3+1 Free
for tickets booked from its portal. The initiative led to a 20
per cent increase in the number of online bookings for
BIG Cinemas, without causing a significant reduction in
the numbers of tickets booked online through third party
ticketing portals.
The dichotomy in the exhibition business is

that several pockets are saturated with the
number of screens, while there are certain other
pockets that continue to be underscreened. The
opening weekend business for films is now an
increasingly important parameter while defining
the success of any film. Interestingly though,
the same film behaves differently in West and in
North over the week. While it is important for the
film to take a big opening all over the country, but
thereafter the behaviour of the film changes. The
weekend to weekday business in west is heavily
skewed towards the weekends but in north, the
weekday business is still significant because the
number of screens in a multiplex are lesser in
North vis a vis West.
- Ashish Saksena
BIG Cinemas
Various Indian state governments are incentivising film

makers to shoot films in their respective states. The
film industry (Bollywood, regional and international)
acts as an important partner for state governments to
promote tourism in the locations where shooting takes
place. Audiences are captivated by various aspects
of the locations where the film was shot aesthetic
appeal, cultural vibrancy of the city/village, heritage,
etc. Films also help spread awareness of Brand India
across countries globally and within India itself. Due
to the weakening rupee, film makers are tending to
shoot more films within India itself rather than foreign
locales as earlier. In view of the enhanced exposure and
tourist demands, the state governments are improving
regional infrastructure, hotels, connectivity, safety, etc
to increase tourism industry earnings. Hence, multiple
state governments are offering incentives to film makers
for shooting films in their respective states. Incentives
offered by local governments are of various types:
Fiscal benefits: Tax concessions provided to all film
Promotion of regional cinema: Benefits provided
Film festivals and awards: Festivals, exhibitions,
Facilitation of shooting of films: Single window
Others: Film cities/studios, animation films and
makers or grants provided to subsidise production

costs.
specifically only to regional films or films satisfying

certain language criteria.
etc. to honor film makers and events to promote film

shooting in states.
clearances for filming at locations, assistance in travel

and accommodation, etc.
studios, etc.
Films act as catalysts by providing employment

and impetus to the industry and more importantly
it encourages the audience for visiting locations
showcased on screen thereby promoting
cinema tourism. The fall in the value of the rupee
has increased the number of bollywood movies
being shot in India, this presents an opportunity
for more overseas movies to shoot in India,
however film-makers have to obtain multiple
shooting permits which has deterred them from
shooting in India; a single window clearance to
shoot films is the need of the hour.
- Kulmeet Makkar
The Film and Television Producers Guild
of India Limited
80
81
Key initiatives of some of these states are listed below:

S. No.
State Name
1.
Maharashtra
Gujarat
Andhra
Pradesh
Karnataka
Tamil Nadu
Uttar Pradesh
Fiscal Benefits
Mumbai, being the film hub of the country, has many film studios and film festivals taking place within it.
Additionally, the film city has had many iconic Indian movies shot here.
The state government has provided 5 year tax exemption to single screen theatres under municipal councils
and 7 year tax exemption to those located in rural areas.44
The state government has provided sanctions of INR 150 million to set up a film city in Chitranagari to serve as
an alternative to the Goregaon film city.45
The Maharashtra Tourism Development Corporation (MTDC) has announced a Bollywood tourism plan which
allows tourists, both Indian and foreign, to take guided tours of film studios and sets while having a firsthand
experience of film shooting.46
Maharashtra was one of the Indian states which provided tax breaks to Bhaag Milkha Bhaag due to the
patriotic theme of the movie.47
The state government is offering 100 per cent entertainment tax exemption to Gujarati films. The state
government is also offering INR 500,000 subsidy to Gujarati language film makers.48
The state government is working on a policy to attract more film shoots in the state. The state of Gujarat also
plans to facilitate film makers and provide discounts on government accommodations at shooting locations.49
The state government has started a single window clearance desk to help film makers scout locations and to
provide logistic support.50
Andhra Pradesh is the first state to earmark 7 per cent of the entertainment tax collected so that it is used for
the development of cinematograph films and arts in the State.51
The state government has provided entertainment tax concession of 7 per cent for low budget Telugu films and
15% for high budget Telugu films.
As per the Andhra Pradesh animation, media, and entertainment policy (2014-2019), there are multiple
incentives for the film industry reimbursement of INR 500,000 to animation film makers, lease rentals and
power subsidies, etc.52
The state government has increased the reward given to national award winning Kannada films from
INR300,000 to INR500,000.53
The government has decided to increase its subsidy to the Kannada film industry. The subsidy will now aid 100
films instead of 75 films earlier.54
The Karnataka AVGC policy aims to attract investors and provide employment in the state opening with
various initiatives such as creating skill labor via training institutes and providing various tax incentives.55 The
government also plans to set up an AVGC Centre of Excellence with funding from central/state governments
and private players.56
The state government will provide 100 per cent entertainment tax exemption on films with Tamil names which
also have a U certificate.57
The Tamil Nadu government has spent INR 80 million to upgrade infrastructure at the M.G.R. film city setting
up an animation and visual effects studio, dubbing theatre renovations, construction of hostels, etc.58
Hindi films which are shot at least 75 per cent in Uttar Pradesh would be eligible to receive a grant of 25 per
cent of its production cost or INR 10 million (whichever is less).59
The Uttar Pradesh government handed INR 10,000,000 to Dedh Ishqiya and Bullet Raja producers to attract
producers to the state.60 The state government has also exempted Dedh Ishqiya from all entertainment taxes
due to the state.61
Films in the local dialects of Awadhi, Braj, Bundeli and Bhojpuri to be extended the same sops.
Film directors selected for award under the Policy would be eligible for a grant of INR 12.5 million, if they
produce their successive venture in UP.
44. Business Standard, Jan 2013, Maharashtra to charge extra

entertainment duty
45. Times of India, Dec 2014, Maharashtra sanctions Rs 15 cr for
Chitranagari
46. Financial Express, Dec 2013, Bollywood tourism takes off in
Mumbai
47. Hindu Business Line, July 2013, Bhaag Milkha Bhaag gets 6
months tax waiver
48. Times of India, Dec 2005, Govt gives Gujarat films new lease
of life
49. Financial Express, April 2013, Indian states look to draw film
makers
50. www.gujarattourism.com
51. Ipr.nic.in
52. www.avcgi.org
53. Times of India, Feb 2009, Boost for Kannada film industry
54. Times of India, July 2013, Subsidy makes more movies
55. IBN live, Feb 2012, Karnataka unveils animation policy
56. Business Standards, March 2012, Karnataka unveils animation
policy
57. IBN live, Feb 2009, No entertainment tax on films with Tamil
name
58. Times of India, Nov 2013, Ministers review renovation of film
institute
59. Business Standard, April 2013, UP amends film policy to attract
producers
60. The Hindu, Jan 2014, UP grants 1 crore aid to Dedh Ishqiya
61. Rediff, Jan 2014, No tax for Dedh Ishqiya in Uttar Pradesh
S. No.
State Name
7.
West Bengal
10
11
12
Jammu &
Kashmir
Rajasthan
Goa
Punjab
Himachal
Pradesh
Fiscal Benefits
The West Bengal government is planning to introduce a single clearance window which will process requests
for films to be shot in the state62
The West Bengal government provides various subsidies for cinemas/multiplexes
New cinema halls entertainment taxes subsidy up to 2 years
New multiplexes entertainment taxes subsidy up to 4 years63
The state government has reduced entertainment tax on Bengali films from 10 per cent to 2 per cent to ease
financial concerns of the regional film industry.64
The state government has decided to wave off taxes accrued on film makers during the days spent shooting in
Kashmir65
The Kashmir Film Festival is held to support local Kashmiri films and to promote tourism in the state66
Films recently shot in Kashmir include Yeh Jawaani Hai Deewani and Highway.67
Films having been 75 per cent shot in Rajasthan and which have a U certificate are 100 per cent exempted
from entertainment tax for one year68
New cinema halls and drive in theatres are given breaks in entertainment tax for 3 years 75 per cent in the
1st year, 50 per cent in the 2nd year and 25 per cent in the 3rd year
Rajasthani language films with a U certificate are given an aid of INR 500,000 if they are shot extensively in
Rajasthan69
International films shot in Rajasthan include Dark Knight Rises and Darjeeling Limited.
The international film festival of India is held annually at Goa, with participation from various film makers
across the world and India as well70
A single window clearance system for permission to shoot films anywhere in the state is already being
followed in Goa. This system has been proposed to be adopted for the rest of the country by the Ministry of
I&B71
Goa is one of the most popular locations for film shooting in India with over 100 films having been shot here
over the past year including Chennai Express, Once upon a time in Mumbai dobaara and Go Goa gone72
The Goa state government is reviewing a proposal which allows film makers to claim up to 5 per cent of the
shooting cost incurred in Goa.73
The state government is setting up a film city and film institute in the vicinity of Mohali to promote the Punjabi
film industry and to also facilitate film makers who are shooting films within Punjab74
The Punjab state government plans to award quality film makers and actors with rewards in the range of INR
1 million to INR25 million. Additionally, the state government also plans to set up 1-2 screen cinemas in rural
locations to facilitate film watching for the masses75
The state government provides a rebate of 5 per cent of the entertainment tax to Punjabi film makers provided
75 per cent of the dialogues are in Punjabi.76
62.
63.
64.
65.
66.
67.
68.
69.
70.
The Himachal Pradesh government provides 100 per cent exemption of entertainment taxes to film makers77
The state government is making a draft film tourism policy which includes incentives for the film industry such
as single window clearance for shooting permissions, state government facilitating travel and accommodation
during duration of stay, etc.78
NDTV, Aug 2013, West Bengal plans to make it easier for films to be shot
www.westbengal.gov.in
Business Standard, April 2010, Entertainment tax benefit to boost Bengal film industry
Daily Kashmir Images, Jan 2014, Govt goes all out to woo film makers
DNA India, Dec 2013, 22 films to be screened at Kashmir International film festival
Times of India, June 2013, Karan Johar has given Kashmir credit
www.rajtourism.in
Times of India, July 2012, Rajasthan cinema on revival mode
Times of India, Dec 2013, International film festival of India
71.
72.
73.
74.
75.
76.
77.
78.
Times of India, Jan 2013, A single window clearance

Hindustan Times, August 2013, Goa shines bright on Bollywood film shoot map
Times of India, Sep 2010, Govt may provide tax rebate to filmmakers shooting in Goa
Times of India, May 2013, Punjab govt sets up film institute to promote Punjabi film industry
Times of India, Sep 2013, Punjab to have rural cinemas
Times of India, Oct 2013, Debt ridden Punjab to end 10-yr waiver of entertainment tax
Financial Express, Dec 2013, Bollywoods obsession with Krish 3, Chennai Express
Times of India, July 2013, Himachal Pradesh to boost film tourism
82
83
India has many locations which can cater to varying

cinematic tastes Indian or international. From snow clad
mountains to exotic beaches and historical monuments,
there are numerous locations which are ideal for film
making. Multiple proposals are also being discussed
at the national level such as creating a single window
clearance for film shooting across the entire country to
reduce producer grievances.79
Key industry considerations

Key positives of the Cinematograph Bill, 2013 are listed
below:
Appropriate advisory panel representation The

committee has proposed a qualifying criterion for
appointing members of advisory panels. These
criterion have been designed to address issues
on selection procedure, applicant credibility, and
quality of advisory panel members. The proposed
guidelines includes panel selection parameters such as
profession/experience in relevant fields (art, cinema,
law, public administration, etc), representation of
women, etc
Single board film certification Film certification, has

always, solely remained with the central government
and not with the state government. Yet, there have
been multiple instances of films receiving approval
from the central government but are faced with
delays/suspensions on certification grounds due to
bans issued by state authorities. In the proposed
amendment, it has been clearly stated that films, once
certified by the board, are allowed to be screened
across all states. Films such as Vishwaroopam,
Madras Caf, Ram Leela, Sada Haq, etc have faced
major issues due to regional authorities issuing bans
over the past year.
Expanded classification of films The 2013 Bill

has proposed film classification as per international
standards. Accordingly, the committee has proposed
5 categories of film certification based on audiences
age Unrestricted exhibition (U), persons completed 12
years of age (12+), persons completed 15 years of age
(15+), restricted to adults (A) and restricted to persons
having regards to nature and content of film (S).
Improved litigation process To prevent overload of

cases at various high courts across the country, the
committee has proposed that all appeals relating to
certification are to be filed with the Film Certification
Appellate Tribunal (FCAT). This also has additional
benefits of reducing applicants costs and reducing
frivolous litigation.
Stronger penalties for piracy Piracy is one of the

major concerns of the film industry due to substantial
loss of revenue (estimated to be around 55 per cent).83
The committee has recommended fine extending from
INR500,000 to INR2.5 million and an imprisonment
which may extend to 3 years for unauthorised
duplication of certified films and also to be made as
sustentative non-bailable offenses.84
Cinematograph Bill, 2013

The present Cinematograph Act was enacted in
1952. Since then, Indian cinema and society has gone
through multiple and radical changes. The mediums
of cinema, tools and technologies and the audiences
have metamorphosed though time. The key objective
of the Cinematograph Bill, 2013 is to make appropriate
amendments to the Cinematograph Act, 1952 keeping
in mind the changing perspectives of audiences and
artists.80 The expert committee (Justice Mukul Mudgal
Committee) on this Bill includes persons from various
fields such as law, film and public administration.
One of the key trigger points for this Bill was the handling
of Kamal Hasans film Vishwaroopam which was facing
state government bans despite being cleared by the
Central Board of Film Certification. The ban triggered
massive loss of revenues due to suspension of screening
in multiple Indian states despite certification from the
Central Board of Film Certification.81 Key focus areas
of the Cinematograph Bill, 2013 include advisory panel
representation, portrayal of women, obscenity and piracy
and film certification guidelines and regulations.
Justice Mukul Mudgal committee had submitted its
report on 9th October, 2013 on issues concerning
the Cinematograph Act to the Ministry and the
Cinematograph Bill, 2013 has been put on the Ministry of
Information and Broadcastings website.82 The draft Bill
has been put up on the website to ensure public viewing
of the proposed act and to foresee any future concerns
which might need to be addressed. The Bill is expected to
be passed in the near future unless further amendments
are required.
It is high time that this archaic Cinematograph

Act of 1952 is amended having incorporated the
contemporary changes and addressing needs
of the film industry. Though the Industry has
welcomed recommendations made by Justice
Mukul Mudgal committee on the proposed
Cinematograph Bill 2013 which addresses
many of the significant issues faced by the Film
industry, however, introduction of the fresh
Cinematograph guidelines would be equally
imperative for smooth implementation of the
proposed Bill.
There are certain key concerns around the proposed

Cinematograph Bill, 2013 which have been raised by
various industry representatives:
- Kulmeet Makkar
Chief Executive Officer, The Film and Television
Producers Guild of India Limited
79.
80.
81.
82.
83.
84.
Expedited film certification process There is a

requirement to expedite the film certification process.
A maximum turnaround time of 30 days has been
suggested by various industry representatives to
prevent issues of indefinite certification delays.
Live mint, Oct 2013, Single window clearance for film shoots in India soon
DNA India, Jan 2013, Delayed release of Vishwaroopam
Press Information Bureau, Oct 2013, Cinematograph Act Report
Film Guild Letter to Ministry I&B, 2013
Stronger penalties for frivolous litigation There

are a large number of cases, disputing films content
certification, filed across various states just before
the release of film causing significant financial losses
to producers. In case of frivolous litigation, a penalty
of assuming legal costs of the film makers could be
imposed on the applicant.
Immunity from offenses There is a requirement
for expanding the definition of film maker, distributor,
exhibitor and others immunity from punishment of
obscenity for a film which has already been certified.
This needs to be expanded to immunity from
obscenity, hurting religious sentiments, violence and
gambling as well.
Overall, the Cinematograph Bill, 2013 is a step in the

right direction for creating a version which has kept
considerations of the current perspectives of the
audience, artists, film makers and society as a whole.
Further amendments might be required to ensure a
smoot process in implementing the Cinematograph
Act. The Information and Broadcasting Minister, Manish
Tewari, has shown commitment towards bringing the Bill
into force in the near future.85 However, with elections
looming, this task will now probably have to be performed
by the next government.
Key challenges
Piracy
The growing internet user base in India is fuelling piracy
like never before. With the advent of technology and the
proliferation of internet in the tier II and tier III markets,
physical piracy has transformed into online piracy which
operates through the Peer-2-Peer (P2P) networks.
P2P sharing does not leave a footprint and thus makes
it difficult for the authorities to clamp down on the
perpetrators.
According to Motion Pictures Distribution Association
(MPDA), the local office of the Hollywoods Motion Picture
Association (MPA), India is the fourth largest downloader
of films after the US, Great Britain and Canada.86
Recently, MPDA carried out a study on piracy by tracking
downloading IP-addresses on P2P networks. The study
revealed that between April to September 2013, India was
among the top 10 countries in the world with the largest
number of illegal P2P activities.86 Most of the Hindi film
downloads happen in Delhi, Bangalore and Mumbai
whereas Tamil films are mostly downloaded in Chennai
and Bangalore.87
Online content theft is the biggest threat to

creative industries today. The growth of the
Internet and evolution of technology makes
Technological Protection Measures (TPMs)
relevant. Stakeholders and the Government
need to unite to create public awareness
campaigns that help create respect for IP, while
informing online content consumers about
various legitimate content delivery platforms
currently available in India.
- Uday Singh
Managing Director,
Motion Pictures Association
The Andhra Pradesh Film Chamber of Commerce

(APFCC) conducted an analysis of the number of illegal
links posted in such P2P networks and found that the
movie Boss had around 3,000 links up within 48 hours of
its release. Such uploads have a multiplier effect as each
link further allows multiple users to download movies and
thereafter share that movie within their private network.
Internet Company Envisional found that online piracy
mainly happens through the file-sharing networks like
BitTorrent and Cyberlockers, or web based file hosts
such as RapidShare or HotFile and is led by pirates with
camcorders who are part of larger crime syndicates
or release groups.88 Building awareness among all
stakeholders like multiplex owners, police and judicial
system and educating advertisers is necessary to crack
down such crime syndicates.
With the advent of digitisation, penetration of movies into
newer geographies, initiatives taken by industry bodies
and the amendment of the Cinematograph Act of 1952
to form a new improvised act in 2013, the Indian film
industry is addressing the issue of piracy by integrating
all available resources. The various steps taken by the
industry are listed below:
Cinematograph Act of 2013

The Cinematograph Act of 2013, constituted by the
Ministry of Information & Broadcasting (MIB) has
proposed to address issue of intellectual property theft
by declaring piracy as a non-bailable offense. In 2011, MIB
issued a notice to multiplex owners under Section 12(4)
of the Cinematographic Act, stating that they shall have
to screen anti-piracy clip to educate consumers about the
ill effects of piracy. The Ministry has made it mandatory
for the multiplex owners to screen such videos and
violation of which will have implications on the license
issued to multiplex owners.89 The aim of this move is to
a create culture of respecting intellectual property and
discouraging piracy amongst the audience.
Reducing release window:

85.
86.
87.
88.
89.
Times of India, Oct 2013, New Cinematograph Act

India major online film piracy, 12 February 2014, Deccan Herald
India major online piracy hub,30 January, 2014, Deccan Herald
Ministry of Information & Broadcasting Issued Notices to Combat piracy of Films & Music.pdf
The Indian film Industry is fighting these challenges

through various initiatives. With digitisation, the theatreto-television window has further reduced from 3-4
months in 2012 to around 2-3 months in 2013.
84
85
Films such as Lootera, Chennai Express, Gori Tere Pyar

Mein and Madras Caf had their TV premiere within 3
months of their release date whereas Once Upon A Time
In Mumbai Dobara (OUATIM 2) and Boss had their TV
premiere in less than 2 months.90
Movie
Theatrical
release date
TV premiere
date
Chennai Express
09 Aug 2013
29 Oct 2013
Lootera
05 Jul 2013
22 Sep 2013
Gori Tere Pyaar Mein
22 Nov 2013
18 Jan 2013
Madras Caf
23 Aug 2013
03 Nov 2013
OUATIM 2
15 Aug 2013
29 Sep 2013
Boss
16 Oct 2013
23 Nov 2013
Bhaag Milkha Bhaag
12 Jul 2013
13 Oct 2013
Source: Press releases
There are many filmmakers taking a strong stand on

piracy with Yash Raj Studios releasing Dhoom 3 only on
digital screens. Producers have taken steps to prevent
piracy including reducing the release window between
the official release of the films in cinemas and their
subsequent release on DVDs and TV, wider release of
films on digital screens, and day and date release of
movies on Video on Demand platforms in countries where
theatrical release is not possible. All these strategies
are intended to reduce the opportunity for criminals to
flood the market with pirated products, and reduce the
consumer incentive to indulge in piracy.
In 2013, with 9 movies crossing the INR1 billion mark and

two movies of these further crossing INR2 billion at box
office collections, Bollywood has stopped complaining
about piracy.
Initiatives to create consumer awareness across

stakeholders
Filmmakers today are making a conscious effort to create
awareness about the ill effects of piracy among their
audience in the hope that if people realise the connection
between pirated films and organised crime, they will
stop purchasing fake DVDs or downloading films illegally.
The Motion Picture Distributors Association (MPDA)
continues to work with local industry bodies to conduct
training and sensitisation programs for law enforcement
in addition to highlighting key threats, challenges of
content theft and remedies to tackle the same. Till date,
MPDA India has trained 1450 staff91 in multiplexes across
seven cities through the Make A Difference (MAD)
training program.
Another initiative has been undertaken by the Andhra
Pradesh Film Chamber of Commerce (APFCC) in
association with the MPDA with support from the U.S.
Consulate General, Hyderabad. In 2013 they launched
an interactive mobile application called iMovie Cop
(IMC), to facilitate seamless flow of information on piracy
and content theft in films with support from the South
Indian Film Chamber of Commerce (SIFCC), the Film and
Television Producers Guild of India (FTPGI) and the Film
Federation of India (FFI). iMovieCop is the first ever antipiracy app. It is a multi-platform and multi lingual (8 Indian
languages including English, Hindi, Bengali, Gujarati,
Telugu, Kannada, Malayalam and Tamil) mobile application.
The application provides information on the existing laws
and ways in which one can prevent content theft. The
application is available on all iOS and android devices and
provides users a platform to report incidents of piracy.
Apart from that, it has the following features:
Provides users an option to attach images of the
incident/ culprit/ screen shot of an infringing website
Provides information on applicable central and state
laws
Provides listings of theatres across India
Bollywood must re-look at and redefine the

way it windows new releases across theatrical
and other platforms. We live in a multi-screen
and multi-platform world, where piracy is a
reality. Why not shrink, or even collapse, if
possible, distribution windows altogether? Why
not release new films across multiple PAID
platforms on day 1 and FREE ad-supported
platforms a few weeks later, thereby allowing a
viewer to watch a film the way he/she wants to?
Our friends from the music industry release their
music on paid and free platforms simultaneously,
earning from both!
- Rajjat Barjatya
Rajshri Entertainment Private Limited
Provided reward points to all users who provide useful
and actionable information
Provides anti-piracy news as they take place from
across the world
Provides links to all enforcement agencies (across the
world) dealing with anti-piracy issues
Provides Anti-piracy campaign videos from across the
world to spread and enhance awareness on piracy

among the communities and general public
Provides access to trailers of all new and upcoming
movies in all the 8 languages as mentioned above to

keep the users updated.
90. Bollywood Movies 2013, Indicine

Industry body initiatives against piracy
Rising cost of talent:
MPA: Joint efforts by MPAs local representative office

and alliance partner APFCC resulted in arrest of members
of two major criminal camcording syndicates operating
in Surat (Gujarat) and Indore (Madhya Pradesh) in the first
half of the year. As a consequence of these successful
enforcement operations, there has been a drop of 36 per
cent in the camcording rates in India in 2013 over 2012.92
These figures were identified through forensic matches,
a process by which MPA analyzes pirated copies in order
to figure out where they came from.
One of the unique characteristics of Indian film industry is

the concentration of power in the hands of top few actors
and now directors and technicians. The characteristic is
prominent across all language markets and more strongly
in case of Hindi (Bollywood) and the South Indian film
industry (Tamil, Telugu, Malayalam and Kannada). With
increasing reach of cinema, the star-power has also
increased many folds.
The first operation targeted a major camcording
syndicate nicknamed Yamraaj located in Indore during

the release of Iron Man 3. The operation resulted in
the seizure of a hi-tech desktop system, 8 core, 12
GB RAM, 500 GB hard disc, 1 GB graphic card, 3 HD
recording devices, DVD copier, 200 empty DVDs,
scanner, software converter and external DVD writer.
The second operation, based on evidence linked
to the first operation was against a major release

group operating out of Surat (Gujarat) nicknamed
NICkkkDon. The operation resulted in the seizure
of 7 hard discs, 2 remote desktop servers, 1 PC, 2
laptops, 1 high end mobile phone router for changing
the IP address, 1 modem and 2 remote servers. The
second camcording syndicate owned 33 websites
and comprised of 6000 members. The above
enforcement operations resulted in directly impacting
the businesses of criminal camcording syndicates
operating in these areas.92
APC of Kerala: The Anti-Piracy Cell (APC) of Kerala Police

Crime Branch along with Centre for Development of
Advanced Computing (C-DAC) is planning to develop a
new software to check the pirated content on the web
and do cyber-patrolling of search websites, torrent based
file distribution sites and social media networks. This
software will help to curb online piracy by preventing
uploading of films. Though the audiences are moving
to quality prints than the pirated camcorder prints, the
industry has a long way to go before it is able to eradicate
piracy.93
Case study
The 90 minute high quality leak in the footage of Pawan Kalyanstarrer Attarintiki Daredi sent shock waves not only across
the films unit but also amongst the industry circles. The movie
faced piracy problems when a large portion of the film got leaked
on YouTube before its release date. The HD footage was later
downloaded, made into a CD and sold in the market. The films
producer BVSN Prasad filed a complaint with the cybercrime
cell who cracked the case within a day and arrested 5 criminals
including one production assistant, constable and three others
in connection with the footage leak. The piracy resulted in a prerelease of the movie from 09 October 2013 to 27 September 2013.
To prevent similar episodes the AP Film Chambers of Commerce is
preparing a check list for film producers.
Source: Attarintiki Daredi piracy culprits caught, www.gulte.com, september 2013
The Bollywood film industry will have to move

from a star centric culture to making content
the king of films; this will ensure a balance
between risk and reward for producers. There is
a significant increase in the cost of production
of films on account of high talent costs, often as
high as 50 per cent of total cost. These costs will
need to be rationalized (through performance
related back end structures) in the future, to
enable all stake holders benefit from a film,
irrespective of its genre or star cast.
- Apoorva Mehta
Dharma Productions
Until a couple of decades ago, actors did not pay much

attention to the business aspect of cinema. However, over
the period of time we have observed actors developing
a business sense and the ability to monetize their fan
following. Many have increased their fees substantially
while a few top A-lister actors also demand a share in
intellectual property rights (IPR). The share could range
anywhere between 0-50 per cent92 depending on the
actors success rate and revenue contribution at the
box office. Many actors now have their own production
houses and mostly enter into co-production deals with
studios. Industry sources continue to emphasis that
the current system is unsustainable from a long term
perspective as the high talent acquisition costs leads to
higher risks and in certain cases impact the return.
Internationally, many studios have built strong franchises
such as James Bond, Star Trek, Avengers or Batman
which are concept led movies and not heavily dependent
on the star cast.

93. Kerala teen creates website, uploads pirated movies, gets arrested, 16 January 2014, India
Express
86
87
I am surprised as to how a revenue or top-line

growth or scale of slate seems to dominate
conversations around Studios or film
businesses. The focus instead should be to
build a profitable motion picture business that
is rewarded adequately for the enormous risks
that are underwritten. The current equation with
fixed high talent costs and a share on the upside
but none whatsoever on the downside is not
healthy for the industry.
- Ajit Andhare
Viacom 18 Motion Pictures
The industry is also promoting newer talent as they come

at a much lower cost which reduces the box office risk
and improves the producers return on investment. During
2013 success of movies such as Aashique 2 and Student
of the Year collected INR700 million and INR600 million
respectively reflects this growing trend. 2014 is expected
to see a further increase in content driven slate with
greater number of movies featuring younger talent.
Slowdown in real estate development

impacting delivery of new multiplexes
A few years ago, the growth in construction of malls
had fuelled the rise of multi-screen theatres across the
country. Around 250-300 malls came up in the country
in the last 2 years with 70-80 per cent vacant space.
Mismanagement coupled with low footfalls and poor
brand pull led to the shutdown of about 40 of these malls.
Only 250 new malls are planned in the next few years
whereas there is space for at least 2000 malls in the
country, a clear indicator of the gap.94 This gap is affecting
the Bollywood industry with almost 150 multiplexes in
India getting trapped in project delays because of the
market slowdown. The average collection of multiplex
screens in 2012 was INR0.5 million per screen for Rowdy
Rathore and INR0.65 million per screen for Barfi.95 With
the addition of another 100 screens, the collections could
have almost doubled for these movies.96 Tier I cities have
witnessed a huge decline in the supply of malls with
Pune facing the sharpest decline of 87 per cent, followed
by Mumbai and Delhi with a drop of 72 per cent and 70
per cent respectively. Exhibitors have started getting
affected with theatres losing about 150 new screens
in the last one year due to delay or the static nature of
the development of these screens. New developers
are shying away from retail or commercial space with
development in tier I cities almost coming to a halt.
94.
95.
96.
97.
98.
Is Indias love affair with shopping malls over?, 26th August, 2013, Business Standard
How real estate affects Bollywood, 4th March, 2013, Silicon India
Bollywood loses out on 150 new multiplex screens, 15th February, 2013, The Economic Times
Cinepolis to double the number of screens in india next year, 4th December, 2013, Business
Standard
These challenges have come at a very wrong time when

films are ready to release on wider platforms due to
digitization but do not have quality cinemas to screen
these films.97
PVR Cinemax
408 Screens
INOX + Fame
296 Screens
Big Cinemas
258 Screens
Cinepolis
84 Screens98
FUN Cinemas
78 Screens
Satyam Cineplex
40 Screens99
With a rental cost of INR 55-60 per square feet, rise in

land cost due to low average occupancy at multiplexes,
unexploited infrastructure, untapped opportunities
and long gestation periods; many developers claim
that construction of malls is no longer a viable option
as it becomes a very costly proposition for exhibitors
to strike a win-win deal with the developers. The ideal
situation would be when the construction period is
shortened to curb the high interest rates of 13-14 per cent
while creating a chain of malls. Also with foreign direct
investment in retail slowly opening up, many international
brands are trying to capture market share in the emerging
Indian market which will again boost the construction of
malls across the country.100
Slow uptake of merchandising in India

Unlike other countries such as US, U.K. and China, Indias
merchandizing market is still very premature. Some of the
reasons for low uptake of the category include:
Limited focus and reach: Unlike Hollywood, where
a films merchandise is promoted across the globe;

most Indian filmmakers have a relatively limited reach.
According to industry estimates, though outside
associations in India are still a small business opportunity,
films can recover almost 10-15 per cent of their costs
through this non-traditional revenue model.101
Piracy: Film piracy, which has plagued the Indian film
industry for several years now, has its spillover effects on

film merchandising as well. Lookalikes and best copies of
original film merchandise are sold in grey/open markets
for a much lesser price.
99. Satyam Cineplexes plans to raise Rs.100 crores, Livemint, April 2014
100. Why real estate slowdown is affecting Bollywood, 7th March, 2013, NDTV Profit
101. The Bollywood merchandise dream factory, 2011, Bollywood.com
Diverse audience to be reached with different

propositions and price points: India is an extremely
price sensitive market with a relatively diverse audience.

Hence, a one size fits all approach does not hold true for
India. It is extremely difficult for filmmakers to customize
market and infuse an element of price differentiation
while marketing their films merchandise across various
Indian states.
Absence of iconic figures: Hollywood has, over the

years created iconic figures such as Batman, Spiderman,
Superman, and Iron Man amongst several others. With an
exception to Chhota Bheem and Krrish, India is yet to
create iconic figures on a scale that will generate robust
revenues for the producer.
Product quality and utility concerns: Film
merchandise in India fetches lower demand owing to
compromising product quality which does not appeal to
the masses. Moreover, in several scenarios the utility
value of these products refrain the consumer from
initiating a purchase.
Limited popularity period: It is important to note that
the popularity period and demand of a films merchandise
is highly dependent on the box office success of the film,
and may last up to 8-9 months after the films release.
Successful franchises have longer popularity period which
extends to over multiple years or even decades.
Lack of exhibition platforms for independent

films
Unlike the west, India has a dearth of film festivals which
can prove to be an excellent platform for showcasing lowbudget Independent films. For example operating since
1993, U.K.s Raindance Film Festival has proved to be an
ideal platform for new filmmakers to hit the cinematic
scene. Moreover during film premiers at such festivals,
independent filmmakers will have an opportunity to
interact with the industry talent, thus providing them an
excellent networking opportunity.
India struggles in terms of dedicated venues for

showcasing Independent films. Although, Sundances
Film Forward program recently came to India, and PVR
Directors Rare initiative are creating a positive outlook for
the independent film industry, one key missing element
in the entire ecosystem is the availability of dedicated
screening venues. A dedicated venue for film screening
venue will provide a much-valued theatrical release to
independent films and also serve as an exclusive space
where filmmakers can nurture their niche audience.
Fund raising for independent films

Funding is one of the key issues faced by independent
filmmakers in India. Although few Indian independent
films have been crowdfunded in the past, India lacks
the presence of dedicated funding platforms such as
Indiegogo an international crowd funding platform
raising millions of dollars by inviting investors worldwide
to finance independent films and other innovative
projects.102 In addition to Indiegogo, the west also
showcases presence of dedicated crowd funding
platforms such as Film Interactor - the worlds first crowd
funding platform created specifically for the Independent
Film community.103 Independent filmmakers usually have
constrainted budgets and hence are unable to market
and promote their films in the most desired manner.
Therefore, several independent films skip audience
attention and are completely out of sight in less than a
week of their release.
Indian audience is still inclined towards commercial films
and the absorption rate of independent films in India is
very low as compared to the west. Although films like
Ship of Theseus is a step forward in the right direction
as far as independent films are concerned, however it will
take a while for the audience and distributors to accept
this changing trend.
Consumption of online media (video, music and

seamless streaming) is growing exponentially,
driven by the rapidly growing smartphone mobile
user base. Content creators are leveraging on
various innovative content delivery mechanisms
to boost their digital revenue streams. The future
does hold promise for financial institutions to
participate in various funding options for content
creators /aggregators where content can be
exploited across various emerging distribution
platforms provided the risks & concerns are
adequately addressed.
With increasing representation of Indian film at

various international film festivals the demand
for Indian content by international audience
is gradually expanding on back of two key
drivers (a) foreign audiences receptiveness to
watch films with subtitles and (b) international
producers opening up their respective markets
albeit for co-produced movies.
- Karan Ahluwalia
President and Country Head Media and
Entertainment, Fine Arts, Luxury and Sports
Banking Group, Yes Bank
- Nina Lath Gupta

Managing Director,
NFDC
102.
103.
Indiegogo company website

Film Interactor Crowd Funding Platform for Independent Films, Filmproposals.com
88
89
How these films raised funds?104

Movie
Produced / Directed by
Monsoon Shootout
Anurag Kashyap Films /

Amit Kumar
Tasher Desh
I Am
Chauranga
Shab
Overdose Joint and

Anurag Kashyap Films /
Kaushik Mukherjee
Anti-Clock Films / Onir
Anti-Clock Films / Bikas

Mishra
Anti-Clock Films / Onir
Budget
Source of funds raised
INR123.7 million
INR50 million
INR35 million
INR35 million
INR50 million
The British Film Institute: INR5 million
Arte France: INR15 million
Anurag Kashyap Films, Dar Motion Pictures and Pardesi

Films: Balance as equity
Investments by Overdose Joint, Anurag Kashyap Films

and NFDC
Dream Digital: Music Producer (10% stake in profit)
Entre Chien Et Loup: Co-Producer
Via Facebook and Twitter: INR15 million
Anti-Clock Films: INR10 million
Juhi Chawla: INR10 million
Anti-Clock Films: INR10 million
Pong (German Production House): INR10 million
Goteborg International Film Festival Fund: INR1 million
Via Facebook and Twitter: INR15 million
Epicentre (French Production House): INR10 million
NFDC: INR25 million
Few international funds available to Indian producers include:

Source of Funds
What is it?
World Cinema
Support (Cinemas
Du Monde)
A new fund of the French Ministry of Culture and

Communication and Ministry of Foreign and European
Affairs to support international co-productions. The
fund is granted to foreign feature-length films seeking
support from French co-producers.
Hubert Bals Fund
Who can apply?
The film should be a co-production between India and

France.
Only a French production company can apply for the

fund.
Between 50%-75% of the grant should be spent by

the French production company.
The Hubert Bals Fund of the International Film Festival

Rotterdam supports projects from Africa, Asia, Latin
America, Middle East and parts of Eastern Europe.
An Indian writer-director can apply for the Script and

Project Development Fund with a work-in-progress
script.
Shorts, documentaries and films made for television are

not taken into consideration.
An Indian producer can apply for the post-production

fund with a first cut of the film.
Fiction films are eligible for script development and

post production funds. A writer-director or a team of
writer-director can apply for the script development
fund with a work-in-progress script.
Adaptations are not eligible, only original scripts are

accepted.
An Indian producer can apply for the post production

fund with a rough or final cut of the film.
Creative documentary applications are only accepted

for post-production category.
Asian Cinema Fund
The Asian Cinema Fund of the Busan International Film

Festival offers grants in three categories:
Script Development Fund,
Post Production Fund and
Asian Network of Documentary Fund.
Source: 7 funds available for Indian film makers, 17 July 2013, dearcinema.com
104. Crowdsourcing in India, 01 March, 2012, crowdsourcingindia
Source of Funds
Global Film
Initiative
Films From South
South Visions
Doha Film Institute

Grants
What is it?
Who can apply?
The Global Film Initiatives Granting Program in the

USA awards fifteen to twenty grants per year, of up
to USD10,000 each.
Funds received from grants are used to support

completion of film production and to subsidize postproduction costs.
Grants are not available for documentaries or short

films.
Norwegian Film Fund to support production of films

from developing countries.
Both fiction and documentaries are eligible.
Indian films which have received this fund are:

Sourav Sarangis Charthe no mans island and
Ritu Sarins When Hari got Married.
50 per cent of the financing needs to be in place.
The film should be minimum 50-minute in length.
A Swiss film fund initiated by Fribourg Film Festival

that supports films from Asia, Africa, Latin America
and Eastern Europe and guarantees their distribution
in Switzerland.
The application has to be submitted by the production

company from the country of origin of the project.
A production company can submit upto 3 projects and

can apply for projects under development or for the
post-production
To be eligible for application, a producer and

production company must be attached to the project.
The project should be directors first or second featurelength film.
Both fiction and documentaries are eligible.
Doha Film Institute offers production and postproduction funding for feature-length narrative films
(70 minutes or longer).
Documentary projects are eligible by invitation only.

Short films are not eligible.
USD50,000 to 100,000 is available for production and

USD30,000 to 75,000 for post-production.
An Indian producer can apply with a project which has

50 per cent of financing in place.
The film should be more than 65 minutes.
An Indian producer can apply with a project.
The project must have a minority Norwegian coproducer attached.
Future trends
Retailing in theatres
The theatrical business is extremely content sensitive
leading to a constant need for exhibitors to increase
average revenue per user. Alternate revenue streams
are likely to become an important source for driving
sustainable business value.
Multiplexes have brought standardization to the entire
movie watching experience from overall hygiene levels
to variety offered at the food concession stalls, to the
comfort of the seats, the advanced cinema viewing
through use of the latest sound and display technology.
Effectively these have set the standards for the Indian
audiences across locations from metro cities to deep
down in the tier II and III markets.
Today, theatres offer much more than a cinema viewing
avenue - getting captive audiences and dedicated footfalls
annually, which could be capitalized by retailers. There
are many possibilities for retail exploration with multiplex
chains with hybrid business models. BIG Cinemas has
105. Crowdsourcing in India, 01 March, 2012, crowdsourcingindia
taken initial steps towards building a business model

whereby it can leverage its existing multiplex network to
bring about a change in the way Indians shop.105
In an era of multiple multiplex chains,

differentiation becomes a crucial driving point
for the business, as also the revenue recognition
from alternate revenue streams. Multiplexes
in India offer exclusivity and captivity like no
other entertainment avenue and thereby have
the potential to become the next apt retail touch
point.
- Venkatesh Roddam
Reliance MediaWorks
90
91
Laser phosphor projectors in theatres

Theatre audiences, across the world, have always
demanded that viewing experiences of films is
continuously improved through technological innovations.
One of the key breakthroughs expected to be adopted
in the future is the use of laser phosphor projectors in
film theatres. To cover the entire colour spectrum, laser
phosphor projectors use the relatively cheaper blue laser
light and a phosphor when which produces red and green
colours. While pure laser projector also exists, they are
not economically viable to be used for business purposes.
The key cost advantage that laser phosphor projectors
have over current lamp based projectors is that the total
cost of ownership (TCO) for laser phosphor is lower after
a usage period of 4-5 years.106
Accumulated TCO
Regulatory issues Countries across the world

(i.e. USA) have various laws prohibiting the use of
lasers, above a certain power limit, based on outdated
laws to protect audiences in light shows which took
place 30 years ago. In India, regulations of laser use
are ambiguous as laws have not been developed
specifically for laser technology. There is a need to
educate law-makers as well as audiences on the safety
of lasers and the various precautions taken by the
industry.
Audience concerns Audiences are still skeptical

about the safety of laser use within cinema halls and at
their homes.
Laser projectors are going to be installed at various

theatres globally including United States, Australia and
Japan.109, 110 The famous Graumans theatre in Hollywood,
which was converted into a laser only projector hall in late
2013, has met with very positive reviews after projector
up gradation.111 Additionally, laser projectors can also be
set up at museums, educational institute and personal
homes.
Laser projectors are expected to be at the forefront of
technology and already have multiple advantages over
state-of-the-art lamp based projectors, despite low
technology maturity, due to superior cost advantages and
enhanced viewing experience for the audience.
The rally of sequels to continue
Source: xxxxxxxx
Key advantages of using laser phosphor projectors are:
Longer service life Laser phosphor projectors,

including phosphor wheel and lasers, have a service
life of 20,000 hours while lamps of current projectors
need to be replaced within 1500-6000 hours.107
Immediate dimming Laser phosphor projectors

can be dimmed from 100% to 0% within milliseconds
so that brightness can be adjusted as per content
requirements. This is in contrast with lamp based
projectors which take a few seconds or even minutes
to adjust brightness while watching the movie or to
turn on/off the projector.108
Industry discussions indicate towards a trend where

most players would like to produce sequels. The idea is to
leverage the historical success of certain movies and build
strong franchisee around them. Dhoom and Krrish brands
have been cited as case examples of how Bollywood is
learning from Hollywood in building a franchise over long
term and monetizing it across multiple platforms. Some
of the sequels lined up in 2014 include Shaadi ke Side
Effects, Hate Story 2, Welcome Back, Ragini MMS 2,
Bhoothnath Returns and Singham 2. Expectations and
budgets coupled with star power are exepcted to rise
with each new sequel.112
In India, the intellectual property driven

franchise model such as the Marvel franchises
is yet to arrive. While franchises and sequels are
beginning to work in India, the concept is still
that of a Star driven franchise. Some movies are
starting to differentiate such as Dhoom 3 which
was a villain driven franchise and ABCD which is
a dance driven franchise.
Lower operating costs Due to high durability of laser

phosphor as compared to lamp based projectors which
need to be constantly maintained and replaced due to
lower lamp service life. Additionally, power costs are
also lower for laser phosphor projectors.
- Abhishek Maheshwari
President and Head, Corporate Strategy &
Business Development, Disney India
Key concerns for using laser phosphor projectors are:
Higher one-time costs Capital costs are higher

when compared to conventional projectors, though,
they are expected to reduce as the technology
matures.
106.
107.
108.
109.
110.
111.
112.
www.barco.com
www.business.pansonic.uk
www.optik-bb.de
IMAX demos new laser technology, www.variety.com, 19 November 2013
IMAX, Sasaki Kogyo ink deal, www.hollywoodreporter.com, 12 March 2013
IMAX is innovating with remote theatrical quality control, www.slashfilm.com, 11 Sept 2013
Weekend Entertainment: Sequel Mania continues as Bollywood buffs cant get enough of what
they loved once, 17 January, 2014, Mail Online India
Conversion of TV shows to movies

Historically, Hollywood has successfully transitioned
various popular television shows into movies. Some
examples include Mission: Impossible, The A Team,
The Addams Family, Alvin and the Chipmunks, The
Lion King, The Avengers, Batman, The Flintstones,
Samurai Jack, The Smurfs and The X Files.113 A similar
trend may soon be witnessed by Indian film industry with
some of the successful television shows now aiming
at the box office. The makers of Big Boss, Endemol
India along with Select Media Holdings Pvt. Ltds film
production arm, Moving Pictures have decided to adopt
the celebrity reality show into a movie. The movie is set
to go into production in mid 2014 and will be based on
the experiences of contestants from all its seasons. Big
Boss is one of the most popular entertainment properties
in India and its makers are confident of its cinematic
potential.114
In India, independent cinema is high on content
and performances but the movies receive
step-motherly treatment when it comes to boxoffice space unless they are backed by notable
industry personalities or large production
houses. The other point to be noted is that the
audience suddenly show an incline to watch
these movies when there is a high level of
positive feedback/ awards from the International
fraternity There will be a change in the treatment
given to independent cinema when there is more
faith put in such movies for their own merit.
- Ashvini Yardi
Co-founder, Grazing Goat Pictures
VoD to be the new DVD

Videos on demand platforms (VoD) are expected to soon
replace DVDs as an online content delivery network portal
for audio video streaming services. Telecom providers
such as Airtel have already launched video on demand
services at prices as low as INR1.115 The company also
plans to release movies on DTH platforms at the same
day of its theatrical release.116
Apple Inc. is offering movie rentals and sales through its
iTunes Store and Google has launched its movie rental
and purchase service platform called Google Play Movies
where one can rent movies starting at INR50. Google
also plans to bring YouTube to television screens in India
through DTH providers. 55 million of its 1 billion global
monthly visits come from India where it has a library of
10,000 full-length Indian movies.117 Also, with commerce
payment collection providers like Suvidhaa Infoserve Pvt.
Ltd., consumers now have a unique portal to recharge
multiple mobile, data card or DTH connections in a
single transaction without having to register on it. This
has created convenience to the Indian online customer
base of 214 million set to double to over 494 million by
2018, and given a boost to the video on demand range of
services at the click of a button.118
113.
114.
115.
116.
List of Films based on TV Programmes, Wikipedia

Big Boss on Silver Screen, 27th November, 2013, apunkachoice.com
Airtel Digital TV launches VOD service, 28th March, 2013, techcircle.in
Airtel releasing Telugu movie on DTH platform the same day as its theatrical release, 24 January,
2014, techcircle.in
Can the growth story hold
Amrita Pandey
Vice President and Head, Theatrical,
Television & Digital Distribution,
Studios-Disney India
We have seen an interesting and eventful year at the movies in
2013. Clear success of multi genres and high concept movies have
contributed significantly to the growth story. As unlike some other
industries where growth is limited to supply and to installed
capacity the sense of creative output and the range of such
output in becoming more disruptive, more genre specific, more
demographic specific and with each such focus, is growing the
market. New benchmarks were set in domestic and international
box office records. What made last year special was that audiences
were appreciative of specialty genres, first-time film-makers and
even new talent. Movies cutting across genres and scale have
all been break out hits like - The Lunchbox, Kai Po Che, Ship Of
Theuseus, Chennai Express and ABCD. We do think the growth
story will hold.
Of the 9000 screens in India, only close to 2000 screens are
multiplex screens with the higher average ticket price. Our national
multiplex chains have the highest admissions per screen ratio as
compared to leading chains world over. Though real estate prices
are lop sided in large metros but that is balancing off and in smaller
cities the rents are much lower and not in proportion to lower
ticket prices - which means if the rent prices are 50 per cent less
in smaller cities, the ticket prices are not 50 per cent less but more
like 30 per cent less and so that is promising. We see the growth in
locations and screens coming from tier two cities. Also organized
retail is going through tough times and over 30 new malls in the top
cities are near closure but that brings it more into focus - that the
organized retail is now one of All Encompassing and in that model
a theatre plex is getting to be indispensable and malls and real
estate will compromise in order to have plexes and this could be
a national phenomemon. Ticket prices will see a rise but not more
much more than inflation, in fact probably lesser and the average
might also be pushed higher for the 5-6 tent poles movies in their
opening week.
Also, as we know the growth story on movies is not all being
written at the theatres only. Every month, we see one new revenue
stream and/or one new market is opening up in the world for
Indian movies. Not all of these are scalable, however once you
aggregate that, it really all adds up you monetize your movie
catalog that is great growth for these new markets or viewer base.
Outside of movie theatres we are mainly a b2b business, we see
that changing for Indian movies as our audience gets connected
on high speeds and the habit of paying for content grows across
devices, services, apps and platforms. When our home video
business declined, we did see an immediate translation to EST
and VOD revenues, as other matured markets have seen. We see
this changing. This is one business where inventory becomes more
valuable with each growing year.
117. Google to bring Youtube to TV screens in India via DTH providers, 8th October, 2013, techcircle.in
118. Suvidhaa unveils new mobile & DTH recharge and billpayment portals, 9 January, 2014,
techcircle.in
92
93
The International market is the next cornerstone for Indian cinema

- and it is not going to be an overnight wonder but it is moving in
that direction. Over the past decade, international revenues on
the right movies have grown by 100 per cent and we see this trend
continuing.
A lot has been discussed in media of the flip flopping by both sides
on pay television rights and that does put stress on the system.
Producers and broadcasters need to find their commercial balance
in their movie buying/ selling strategy. In most matured markets,
these deals are formula based and linked to box office performance
output deals. This is a consistent, transparent approach. Once we
can move to that maturing phase, there will be some balance there.
Amid these trends, what can slow down the growth is a)
disproportionate spend on marketing which can skew the
economics and put undue pressure on the recovery of cost and
profit of each movie b) the present skew in costs for most of our
movies is very talent skewed and globally it is limited to 25 per
cent and in India it reaches 50 per cent and sometimes more - and
that can hurt the overall eco system and not allow all players to
withstand and in that maturing phase of the industry and this may
slow down growth. The success of high concept (not necessarily
big star) movies and how they have riveting audiences last year has
been an encouraging trend to counter this.
Disclaimer: Unless otherwise noted, all information included in this column/
article was provided by Amrita Pandey. The views and opinions expressed herein
are those of the authors and do not necessarily represent the views and opinions
of KPMG in India.
Conclusion
Cinema is one of the most important mediums of
entertainment- especially in movie mad India- and is likely
to continue to see growing audiences in the foreseeable
future. Theatrical is one of the most important revenue
streams for the industry and is expected to contribute
73 per cent (2018) to industrys revenues. With 90+ per
cent digitisation complete, the industry has achieved its
maximum growth potential via screen digitisation. The
next wave of significant growth is expected be driven
by rapid expansion of multiplex infrastructure which will
be a function of performance of real estate industry and
growth of organised retail in India. We believe that the
future growth will be driven by greater footfalls which
will be a function of delivery of great content while the
ATP growth will remain moderate for a while. C&S as a
revenue stream will continue to hold a strong position
and is expected to contribute 11 per cent (2018). We
expect digital technologies to play an increasingly
important role across the value chain of the film industry
and eventually start contributing albeit, a small proportion
of the total revenues.
94
05
New Media
Getting to critical mass
Digital ad spends accounted for 8.3 per cent of the total

ad spends of INR362.5 billion in India in 2013.2 Digital
media advertising in India grew by 38.7 per cent in 2013,
faster than any other ad category.2 Mobile, social and
video emerged as star categories in advertising owing to
the proliferation of smartphones, 3G and off-deck mobile
apps. With the dramatic growth in mobile usage, content
providers and advertisers are seeking opportunities to
get their messages across on this preferred medium of
the masses. Mobile-first strategy is the new priority
for marketers and publishers. Marketers who want to
enhance value for their brands are faced with a new set of
opportunities as well as challenges.
The Indian internet usage maintains its

growth trajectory
By the end of 2013, India was home to approximately 174
million internet connections shared between wireless
and wireline connections.1 Wireless connections grossed
about 86 per cent of the total internet connections in
India and continue to grow at a faster pace, compared to
the wireline connections.1 Driven primarily by wireless
access, the total number of internet connections is
estimated to reach 463 million by the end of 2018.1 The
projected CAGR for wireline connections for the period
2013-18 is now expected to be 14 per cent.1 The projected
CAGR for wireline connections was 17 per cent1 for
2012-17 and has come down since last year because the
broadband connection base has been increasing at a
lower rate than that was expected in the past.3
01. KPMG in India analysis, IAMAI-IMRB Mobile Internet in India report, 2013, TRAI performance
indicator report 2013
India internet connections, 2013(E) 2018 (P)

463
500
47
392
400
Million Connections
Keeping pace with the changing consumer behavior

and increased access to digital devices, the new media
ecosystem evolved to new levels during 2013. The
internet usage increased with mobile phones providing
an important medium for penetration to rural areas.
Connectivity and access continued to provide the tailwind
for growth of various components comprising new media
in the year gone by. The total internet user base in India
grew to approximately 214 million by end of the year, with
almost 130 million going online using mobile devices.1
Mobile Internet users dominated the total internet user
base capturing an overall share of 61 per cent.1
36
268
300
31
213
200
41
331
27
174
24
100
150
237
186
295
351
416
0
2013 (E)
2014 (P)
2015 (P)
Wireless Connections
2016 (P)
2017 (P)
2018 (P)
Wireline Connections
It should be noted that, as per our analysis, the ratio of

number of wireless connections to number of internet
users is generally one whereas each wireline connection
may actually be used by multiple users. The number of
internet users, in India are seen to have grown at 40 per
cent in 2013 to reach 214 million users and is expected
to reach 239 million by end of the year 2014.3 Industry
experts portend that India can surpass USA in terms of
total number of internet users in 2014.
The growth in the number of internet users in 2014 was
likely driven, primarily, by the penetration of internet
enabled mobile devices, notably, smartphones and
tablets and by the growing adoption of 3G in India. This
presents a good opportunity for the mobile content
providers, device manufacturers and businesses that
are considering a multi-channel approach to engage
customers.
It is estimated that the total internet user base will reach
494 million by the end of 2018 as against 938 million TV
viewers in the same year.3This means that the Internet
user population will be approximately 53 per cent of
the total number of TV viewers in the country in 2018
compared to 27 per cent in 2013.3 This shift towards the
digital media is important for digital media strategists
to consider, in order to balance their marketing budgets
between online media and traditional TV strategy. The
digital media presents an opportunity to engage specific
target segments in a more cost effective way as opposed
to the mass outreach afforded by traditional TV.

96
India internet vs. TV penetration, 2013(E) 2018(P)

1000
800
791
938
913
886
857
825
Percentage spend on mobile internet, 2012-13

100%
90%
80%
Millions
70%
600
494
422
377
400
239
214
200
57%
55%
43%
45%
60%
50%
40%
295
30%
20%
10%
0%
0
2013 (E)
2014 (P)
2015 (P)
TV Viewers
2016 (P)
2017 (P)
2012
2018 (P)
Voice Spend
Internet Users
2013
Mobile Internet Spend
Source: IAMAI- IMRB Mobile Internet in India, 2013
Mobile continues to be the preferred choice of

access
It is estimated that, in 2013, 61 per cent of the total

Internet devices in India were mobile devices and that the
share is expected to increase to 71 per cent by 2018.04
The personal computer (PC) may no longer be the primary
or exclusive means to provide the first user experience of
the internet. Broadband penetration is low in rural areas;
hence, these areas are home to a high number of
mobile-only internet users for whom mobile devices are
the primary or the only medium for connecting to the
internet.
The number of mobile internet users have grown steadily

and is estimated to have reached 130 million at the end
of 2013.04 The growth is expected to continue and the
mobile internet user base is projected to reach to more
than 350 million by the end of 2018.04 While urban users
are steering the growth, rural India is not left far behind.
The mobile internet user base in rural areas has grown
by 28 per cent since June 2013 and is estimated at 27
million, as against 103 million urban internet users, at the
end of 2013. 05 The growth in urban market could taper in
future; the tailwind for growth of internet user base and
internet penetration may come from the rural areas.
Internet users in India by device split, 2013 (E)
Mobile internet users in India, 2013(E) 2018(P)

400
353
299
300
Million Users
97
251
202
200
158
130
100
0
2013 (E)
2014 (P)
2015 (P)
2016 (P)
2017 (P)
2018 (P)
Consumer preferences have also shifted towards the

need to access information on the go, and mobile internet
seems to address this need. This is supported by the fact
that the amount spent on mobile internet as a percentage
of the total amount spent on mobile grew from 43 per
cent in 2012 to 45 per cent in 2013.06 On an average,
users spent INR 173 on mobile internet usage out of the
total average mobile bill of INR 387 in 2013. 06

05. IAMAI- IMRB Mobile Internet in India, 2013
06. IIAMAI- IMRB Mobile Internet in India, 2013
Internet users in India by device split, 2018 (P)
Internet enabled mobile handset prices in India

2013 (percentage market share)
141mn (29%)
Laptop/Desktop
Internet users
353mn (71%)
Mobile
Internet users
Mobile internet revolution in India is being led largely

by low cost models of internet enabled mobile devices
available in the market that the budget conscious Indian
buyer can afford. This is also evident from the estimates
that almost 31 per cent of the mobile internet users are
owners of budget phones costing less than INR10,000
but more than INR6,500.07 This is also the price range in
which potential consumers graduate from basic feature
phones to low end smartphones. The median price of a
handset has also fallen from INR8,250 in 2012 to about
INR7,000 in 2013 making mobile phones more affordable
in the market.07 The handset manufacturers are also
capitalising on this opportunity, presented by the value
for money segment, by offering more features at lower
prices in line with the current preferences of the Indian
consumers.
Absolute numbers seem to paint a rosy picture

It took a decade for the country to grow from 10 million
to 100 million internet user base and only three years
to double that number to 200 million.08 Indias high
population brings with itself a good market in terms
of absolute numbers but the growth in internet user
base can be attributed to the evolution of the internet
ecosystem comprising of telecom operators, content
providers, handset manufacturers and to initiatives from
the Government such as setting up of Community Service
Centers (CSC) or Cyber cafes, which have now become
major points of internet access in rural areas. The National
Optical Fibre Network (NOFN) in India is expected to be
completed this year with a plan to provide broadband
connectivity to 250,000 Gram Panchayats.09
07. IAMAI- IMRB Mobile Internet in India, 2013

08. http://gadgets.ndtv.com/internet/news/internet-users-in-india-set-to-reach-243-million-by-2014report-446653 -( IAMAI Chairman)
09. Bharat broadband Network Limited http://www.bbnl.nic.in/content/
Source: IAMAI- IMRB Mobile Internet in India, 2013
Although the absolute number of internet users looks

impressive, it is important to recognise that India still
struggles with low internet penetration of 17 per cent.10
This is lower in comparison to many developed and
developing countries. It is apparent that majority of
the Indians still do not have access to Internet. Poor
broadband availability in rural areas, patchy connectivity
due to limited existing investments in the internet
ecosystem (telecom towers, optical fiber network etc.),
issues in last mile access and dominance of English as
a medium for information dissemination are some of
factors responsible for low internet penetration. The
opportunities are immense if the bottom of the pyramid in
the Indian population also gets to access internet.
98
99
Internet penetration
Country
Internet Penetration (%)
India
17%
Brazil
49%
China
44%
Russia
60%
USA
86%
U.K.
87%
Japan
79%
per cent YoY from 2012.11 High speed connectivity is a

metro phenomenon in India; the internet connectivity at
>4mbps speed reached 3 per cent penetration in 2013,
registering 100 per cent growth YoY, and high broadband
(>10 mbps) penetration grew at 200 per cent YoY to
reach 0.3 per cent of Indias overall internet connections
in 2013.12 In comparison, China is delivering higher
speeds to more users and with a faster growth rate.
Chinas broadband (>4mbps) penetration reached 20
per cent in 2013, growing at 413 per cent YoY, whereas
high broadband (<10mbps) penetration grew to 1.1 per
cent registering 450 per cent YoY. 12 While broadband
over cable is exploding as a market, though over a small
base, India could have a lot of catching up to do in terms
of connection speeds and respective penetration when
compared to other major developed and emerging
countries.
Source: PEW research report 2013, eMarketer newletters, KPMG in India analysis
Average connection speeds (mbps)

The subscriber base for fixed line broadband in India was
estimated at 15.5 million by the end of 2013, growing
by approximately 1 per cent QoQ.11 The sluggishness in
QoQ growth for fixed line broadband can be attributed
to rapid mobile data adoption as more and more
consumers access Internet on the go. Further, there
has been a lack of new investments in fixed line by the
incumbent telecom operators. Also, most of the existing
infrastructure is concentrated in urban and semi-urban
regions. Declining growth rate and low penetration of PCs
can be another constraint.
14
13.3
12
10.5
8.8
7.2
2.9
2.3 2.4
1.6
1.4
0
Brazil
China
India
Q3,2012
16
6.7
India wireline broadband subscribers, Mar - Dec

2013 (In millions)
9.8
10
Japan
USA
Canada
Q3,2013
Source: AKAMAI State of the Internet Reports Q3-2012 and Q3-2013, KPMG in India analysis
15.5
15.5
15.4
15.2
Broadband (>4 mbps) connectivity (percentage

above 4 mbps)
15.05
15
14.5
14
Mar-13
Jun-13
Sep-13
Dec-13 (E)
Source: TRAI Performance indicator reports 2013, KPMG in India Analysis
The speed, as well quality of internet connectivity,

received a boost in 2013 and is expected to only get
better in 2014. However, the improvement does not
seem good enough when compared with our neighbor,
China. Average connection speed in India increased from
1 mbps in 2012 to 1.4 mbps in 2013, registering a growth
of 40 per cent YoY, while the average speed in China
in 2013 was 2.9 mbps showcasing a growth rate of 81
11. TRAI performance Indicator reports 2013
12. AKAMAI State of the Internet Reports Q3-2012 and Q3-2013
Broadband (>10 mbps) connectivity (percentage

above 10 mbps)
Internet enabled smartphones in India, 2013(E) 2018(P)

400
350
334
300
267
Million
250
215
200
161
150
115
100
66
50
0
2013 (E)
India standing tall as the second largest

mobile phone user base and third largest
smartphone market in the world.
Globally, the number of mobile phone users is expected
to reach 4.55 billion and mobile phone internet user base
would be 2.23 billion by the end of 2014.13 Smartphone
adoption will also continue its fast paced trajectory
with the total smartphone user base expected to reach
1.75 billion by the end of 2014.13 The growth is being
led primarily by the developing regions of Asia Pacific,
notably India and China. The overall Indian mobile handset
market grew at 21 per cent YoY.14 By the end of 2013,
India is estimated to have gained a mobile phone user
base of more than 900 million.15 While the worldwide
smartphone shipments have surpassed 1 billion units in
2013,16 India became the third largest smartphone market
in the world in terms of shipments of 44 million units.14
Smartphone shipments in India are expected to grow
steadily over the next 5 years. While Samsung maintains
the lead in the smartphone market in India, other major
players are Nokia, Micromax and Karbonn. The Android
smartphone market continues to be dominated by
low cost smartphones.17 By the end of 2013, India had
approximately 66 million internet enabled smartphones
and the number is expected to reach 334 million by the
year 2018.18 This growth presents a good market base for
digital advertisers, mobile gaming developers, VoD and
digital music companies.
13.
14.
15.
16.
eMarketer newsletter, 16 Jan 2014

IDC press release, 29 Aug 2013
TRAI performance indicator report, Sep 2013, KPMG in India analysis
IDC press release, 26 Nov 2013
2014 (P)
2015 (P)
2016 (P)
2017 (P)
2018 (P)
Source: IDC shipment estimates 2013, KPMG in India analysis
The CAGR (20132017) for smartphone shipments in

India as compared to the corresponding growth rate in
developed countries such as USA, UK and Japan is much
higher and at 53.8 per cent beats the growth rates in
developing nations such as China and Brazil.19 This could
have a spillover effect on the growth of mcommerce,
mobile advertising and mobile gaming.
CAGR - Smartphone shipments (2013-2017)

60%
53.80%
50%
40%
30%
23.10%
20%
11%
10%
7.40%
7.60%
1.70%
0%
China
USA
UK
Japan
Brazil
Source: IDC worldwide mobile phone tracker, 4 Mar 2013
17. IDC press release, 2 Dec 2013, Industry discussions conducted by KPMG in India
19. IDC worldwide mobile phone tracker, 4 Mar 2013
India
100
101
As the average selling prices for smartphones continue to

decline, smartphone shipments are expected to surpass
feature phone shipments by the year 2016.20 At present,
feature phones continue to account for a sizable share of
approximately 85 per cent of the total handset shipments
in India.21 However, feature phones may have already
started losing the market share to smartphones starting
this year.
In 2014, more and more mobile phone users in India will
likely switch over to smartphones and tablets as these
devices become more affordable and as 3G/4G networks
connectivity improves. Young urban population and
cultural openness to mobile devices are other factors
that are likely contributing to the growing adoption of
smartphones in India.
Kids are early adopters of technology and to

cater to the Screenagers, kids entertainers
are ensuring that they are served their daily
dose of entertainment at a time, place and
screen convenient to them. To keep this
wired generation engaged across screens,
entertainers are customising content across
platforms, be it - video games, VOD, streaming
content on the mobile and tablets, etc.
Tablet sales show modest growth

Tablet adoption in India is growing thanks to the
availability of these products at a wide range of priceshigh-end Apple and Samsung devices that sell for
upwards of INR30,000 (USD500) to entry-level devices
from players such as Micromax, Karbonn and Lava that
are available at prices below INR10,000 (USD165).23 In
2013, the total shipments of Tablet PCs in India were 4.5
million compared to 3.11 million shipments in 2012,24 a
growth of 45 per cent in one year.
Key drivers for growth are increase in the number of
new models launched by companies eyeing the Indian
consumer market, as well as the demand expected to be
generated via enterprise adoption of Tablets. The visibility
of Tablets in the Indian market is additionally being pushed
by an increasing demand for Tablet PCs in the education
sector in India in order to provide affordable tablets to
students at a low price.
Tablets shipments in India, 2012 2013(E) (in

millions)
4.5
3.11

Executive Vice President and Business Head
Kids Cluster, Viacom18 Media Pvt. Ltd
Market share of smartphone OS in India, 2013

By share of online traffic, Android-based smartphones
dominate the Indian market with 90 per cent traffic
generating from Android-based smartphones, followed
by 5 per cent traffic driven by Windows operating system.
Apples iOS stands third in line with only 4 per cent
smartphone web traffic generated by iOS in the Indian
market.22
Smartphone OS market share split by traffic

Ssmartphone OS
Share of Web Traffic (%)
Android
90%
Windows Phone
5%
iOS
4%
BlackBerry
1%
Source: StatCounter
20. IDC press release, 26 Nov 2013

22. StatsCcounter 2013 data
2012
2013(E)
Source: CMR India Quarterly Tablet PC market review 2013, KPMG in India analysis
Android OS based tablets dominate the Indian market

followed by iOS and Windows based tablets. The
tablets market may continue to grow and Android could
remain the dominant OS, though it is expected to lose
some share to Windows and iOS platforms as the latter
launch more models at affordable prices for the budget
conscious Indian.
Although penetration of Tablets in India is growing, there
is still a lot of ground to be covered when compared to
other countries in Asia. The Tablet penetration in India is
2 per cent and is not as impressive as the penetration
seen in other developing countries such as China where it
stands at 45 per cent.25 Further, the growth from 2012 has
not been as impressive as has been experienced in other
countries.

24. CMR India Quarterly Tablet PC market review 2013, KPMG in India analysis
25. Nielsen Asia Mobile Report, 2013
Tablet Penetration by Country, 2012 - 2013

60%
57%
50%
45%
47%
40%
30%
30%
32%
20%
17%
10%
16%
5%
5%
1%
0%
Hong Kong
China
Singapore
2012
Thailand
Indonesia
1% 2%
India
2013
While there are several roadblocks that have prevented

3G services from achieving the expected uptake in
India, most of them are short-term hiccups rather
than long-term challenges. Slowly, yet steadily, after
3 years of launch, 3G has finally started to pick up in
India. Investments from telecom operators in improving
the infrastructure, improved affordability of handsets,
decline in 3G rates with the launch of 4G and aggressive
marketing by telecom companies will likely act as drivers
for growth of 3G services. India, currently, has about 42
million 3G connections which are expected to shoot to
approximately 369 million by the end of 2018.26 Major
telecom players in the country are considering focussing
their energies and resources to expand their networks
and to increase their 3G user base. In November 2013,
Vodafone announced investments close to 700 million
pounds (about INR71 billion) in India during the next 2-3
years to expand their 2G and 3G network.27
Source: Nielsen Asia Mobile Report 2013
3G subscribers in India, 2013 to 2018(P)

3G in India could be at an inflexion point
400
369
350
284
300
250
Million
The Indian market is still awaiting the technology leap

which was promised when 3G services were launched in
late 2010, and 2013 was expected to be The Year. Also,
3G adoption has been slow compared to the growth rates
expected at its launch. 3G adoption requires supporting
factors such as higher smartphone penetration, availability
of relevant content and applications and improved
network coverage by operators. So far, inadequate
network coverage, lack of sufficient spectrum, high
price of 3G services, and the absence of mass market
affordable 3G handsets have prevented these services
from becoming a success in the country.
219
200
146
150
82
100
50
42
Challenges
1.
Inadequate network coverage because of limited 3G

towers
2.
Limited spectrum availability
3.
High price of 3G data services as compared to GPRS/

EDGE
4.
Lack of affordable 3G enabled handsets
5.
Patchy connectivity and inconsistent experience on 3G

network
Growth Drivers
1.
Investments by Telecom operators to expand and improve

3G infrastructure to tier2 cities and rural India
2.
Affordable prices for 3G data services
3.
Indias growing Internet population
4.
Affordable smartphones and tablets
5.
Growth of social media, gaming, VOD and the need for

youth to stay connected by sharing pictures and videos
2013 (E)
2014 (P)
2015 (P)
2016 (P)
2017 (P)
2018 (P)
Apps have gone mainstream globally

Apps are to mobile what websites were to desktops
and are key to defining the overall mobile ecosystem.
Apples App store and Googles Play have been at the
forefront of bringing off-deck content at the fingertips
of the consumer, and these continue to be the largest
active off-deck stores by virtue of their rich supporting
ecosystem and growing developer communities. The
total number of app downloads, globally, stood at 102
billion approximately in 2013, and is estimated to reach
almost 269 billion by the end of 2017.28 The app economy
is expected to continue to expand and growing markets
such as India and China would likely provide the firepower
for this growth.
Factors such as growing mobile Internet penetration,
affordable smartphones, and mobile-ready regional
content have mostly led to the growth of the app
ecosystem. Mobile valued added services (MVAS) which
is a paid content on-deck model controlled by telecom
operators could be under serious threat.
27. Vodafone press release, 13 Nov 2013
28. Gartner press release, Sep 2013
102
103
Share of free app downloads globally, is also anticipated

to increase, largely led by growth in countries such as
India where users are still not open to pay for apps. Free
apps currently account for about 60 per cent and 80 per
cent of the total available apps in global Apple App Store
and Google Play, respectively. Free app downloads at
93 billion constituted roughly 91 per cent of the total
global downloads in 2013.29 It is estimated that free app
downloads would account for 92 per cent with 128 billion
downloads by the end of 2014.30
Mobile app store downloads, worldwide, 20122017 (in billions)

2012
2013E
2014P
Free
downloads
57
93
128
Paid-for
downloads
11
Total
downloads
64
102
139
90%
91%
92%
Free
downloads (%)
Source: Gartner Press release, Sep 2013
2014 - India emerges as an App-tastic

Economy!
Dippak Khurana
CEO and Co-Founder,
Vserv.mobi
The recent WhatsApp acquisition by Facebook is a thumping
validation of todays mobile frenzy among consumers and investors
alike. With its inherent capabilities to bridge physical transactions
and drive content and services to consumers, it is safe to say that
the world has been engulfed by mobile domination.
Interestingly, there are rafts of statistics to show how India is
galloping into the thick of the mobile action. Multiple reports state
that in 2013 alone, between 247-257 million handsets were sold in
India in 2013, registering a year-on-year growth of 181%. Another
report estimates that from the 169 million active Internet users in
India, nearly 130 million use their mobiles to get onto the Internet,
out of which 49 million are active users in rural India. On the other
hand, Indias app developer base is estimated at 250,000 and
expected app downloads are slated to cross 8.4 billion by 2016.
For users, mobile apps are enabling a rich first Internet experience
with immersive engaging experiences despite Indias undulating
internet bandwidth footprint. For developers, mobile represents
the power to productise innovation and lower the barriers to
entrepreneurship; which is a perfect fit for creative, tech-savvy,
but resource-constrained Indians. Today, Indias young App
Entrepreneurs have an unprecedented opportunity to create
products through apps that will touch the lives of millions of
mobile users across the world. Global ambitions now also define
a growing swathe of budding student developers and start-ups
from Indias non-metro towns who are carving a niche in the global
mobile app scene.
To make a lucrative venture and build scale, mobile developers
are resorting to a mix of advertising-enabled free apps strategy
along with in-app purchasing to trigger app downloads. On the
other hand, brands have started seeing the shift in consumption
habits from desktop to mobile and are increasingly opening their
purse strings towards mobile advertising. This industry is also
being catalysed by the next billion users of the country, who will
demand apps in regional languages that will blur the language
divide in content consumption. In a nutshell, mobile is sculpting
a high growth ecosystem in India with beneficiaries in the form
of rural and urban consumers, telecom operators, developers and
advertisers.
With mobile becoming the primary screen for Indians, the app
ecosystem too will continue to evolve fuelling Indias mobile
growth trajectory. On the other hand, with precedents of mobile
businesses like WhatsApp fetching heady valuations, it wont
come as a surprise if 2014 is dubbed as the year of Indian mobile
developers contributing to the global app-onomy.
Unless otherwise noted, all information included in this column/ article was provided by
Dippak Khurana. The views and opinions expressed herein are those of the authors and do not

India offers third largest download user base for

Google Play free apps favourite
India ranks third in terms of number of app downloads
from Google Play in 2013. However, it does not figure in
the list of top-5 countries contributing to overall revenues
of Google Play.31 It may point towards the fact that
Android users in India, as has been the trend globally, are
still more fascinated with free apps and could take some
time before maturing to paying for content. App platforms
and content developers may need to consider pricing
the content within the affordable range for Indians, for
upfront paid downloads and in-app purchases, to grow
at the impressive triple digit growth rates as seen for
countries such as China, Russia and South Korea.32 The
Indian market is yet to crack the freemium model as the
model works efficiently only with higher volumes. This
market, at present, is largely characterised by either upfront download purchases or by ad-driven models. While
most Indian apps are available free of cost, the content
developers hope to earn from in-app purchases and paid
upgrades.
Google Play downloads - top countries 2013

Rank
Country
USA
South Korea
India
Russia
Brazil
Source: App Annie Index 2013
Google Play revenues - top countries 2013

Rank
Country
Japan
South Korea
USA
Germany
UK
Source: App Annie Index 2013
It is important to understand the consumers of the

mobile app market in order to capitalize on the changing
dynamics in the Indian app economy. The following table
presents the demographic details of the Indian app
audience.
31. App Annie Index 2013

32. Distimo 2013 Year in review publication, 17 Dec 2013
India mobile app audience

Gender
Male
89%
Female
11%
Age group
<18 yrs
11%
18-24 yrs
52%
25-35 yrs
29%
35+ yrs
8%
Education
Illiterate
3%
Primary-Middle School (upto 9yrs)
3%
High School (10-12 yrs)
24%
Under Graduate
24%
Graduate
32%
Post Graduate
14%
Occupation
Business
12%
Self Employed Professional
8%
Full time job
34%
Part-time job
12%
Student
29%
House Wife
2%
Currently not working
3%
Occupation
>INR 1,00,000
3%
INR 50,000 - INR 1,00,000
3%
INR 20,000 - INR 50,000
17%
INR 5,000 - INR 20,000
41%
<INR 5000
36%
Location
Top 4 metros
45%
5-9 Top cities
19%
Other 1 million+ Towns
24%
Other town class
12%
Source: Vserv.mobi
104
105
Digital stores offer a scalable platform for content

owners to monetise digital content
Digital store platforms such as App Store and Google
Play offer access to an existing customer base and an
established distribution channel for developers and
content owners. A 70/30 revenue split has become fairly
standard; however, players such as Microsoft with their
Windows app store are challenging the established
standard. Windows platform offers the standard 70 per
cent list price share to developers initially. However, once
the application makes USD25,000, the share increases to
80 per cent.
Windows has a competitive offering in terms of revenue
sharing for in-app purchases as well. All other stores
charge the standard transaction fee of 30 per cent
on the in-app sale. However, on the Windows Store,
the transaction fee is applicable only if the in-app
purchase goes through the Windows Store purchasing
infrastructure (content owner gets 100 per cent of the
sales if payments are handled on content owners own
server)
Comparison of digital store platforms revenue sharing agreements

Type of sale
Paid app downloads
In-app purchases
Platform
Developer revenue share
Store revenue share
Apple app store
70%
30%
Google Play
70%
30%
Amazon app store
70%
30%
Windows app store
70% for the first USD25,000; then 80%
30% for the first USD25,000; then 20%
Apple app store
70%
30%
Google Play
70%
30%
Amazon app store
70%
30%
Windows app store
70% if transaction happens through

windows API, otherwise 100%
30% if transaction happens through

windows API, otherwise 0%
Source: Developer support Google, Apple, Amazon and Windows
The large content libraries on the app stores usually

keep users coming back for more, globally, as well as in
India. Globally, the two largest app stores from Apple and
Google together host more than 2.1 million apps and have
delivered more than 110 billion downloads worldwide till

date.33 The large and diverse ranges of apps keep users
engaged and loyal.
Global downloads for Google play and Apple app store

Year
Platform
Jan 2013
Jan 2014
Google Play
Apple app store
Google Play
Apple app store
Number of apps available for download
~800,000
~775,000
>1.1 million
>1 million
Total global downloads
~25 billion
~40 billion
>50 billion
>60 billion
Source: Pure Oxygen estimates, Apple WWDC Oct 2013
In line with the global trend, usage of Indian app stores

and downloads are expected to continue its growth in
2014.
33. Pure Oxygen estimates, Apple WWDC Oct 2013
Indias geographical diversity creates a need for innovative

regional language apps. This presents an opportunity for
the Indian businesses to tap into the potential afforded
by the growing demand for apps in local and regional
languages.
Google launched a Hindi handwriting tool for search and
Mozilla Firefox rolled out a fully localised Tamil version
of its free open source Internet browser in 2013. In
August 2013, Samsung announced the launch of regional
language user interface and applications for its Indian
customers which would enable Samsung smartphone
users to choose from any of the nine Indian languages
including Hindi, Punjabi, Bengali, Tamil, Telugu, Kannada,
Malayalam, Marathi and Gujarati.34
The sizable mobile user base residing in tier 2 and tier
3 cities, who limit their mobile usage to only voice
calls, given the limited number of mobile apps catering
to content in local languages present an opportunity
for content providers. Multiple companies such as
Plustxt, Hazel Media, Mad Rat Games and Newshunt,
are vying for a share of this growing market. In 2014, it
is expected that there will be an increased number of
regional and localised content and apps developed as
content consumption on mobile devices outpaces other
mediums.
Digital ad spend and the landscape in India

Digital advertising in India grew by approximately 38.7
per cent and touched INR30.1 billion, in 2013.35 Indian
mobile advertising is expected to grow at 50 per cent
and reach INR5.1 billion in revenue by end of 2014.35
Digital marketers are recognising this trend and are now
considering to or are already on their way to execute
Mobile-first branding and customer engagement
strategies. The ad spend in digital media is set to grow
at 37 per cent to reach INR41.2 billion in 2014.35 Google
and Facebook account for close to half of the advertising
revenue 36 spent online in Asia, and the dominance can be
attributed to their massive user base. 50% of the online
advertising revenues are garnered by Google in India and
Facebook has now become a force to reckon with.36
Digital advertising market in India, 2013(E)

2018(P)
120
102.3
100
88.1
19.1
INR Billions
The vernacular wave in the Indian App Economy
69.7
80
55.1
60
30.1
10.7
7.4
41.2
40
15.1
5.1
3.4
20
26.7
36.1
73
47.7
83.2
59
0
2013 (E)
2014 (P)
2015 (P)
Desktop internet advertising
2016 (P)
2017 (P)
2018 (P)
Mobile advertising
Source: Industry discussions conducted by KPMG in India, KPMG in India analysis
Digital ad spend mix in India

Search and display are some of the most accepted digital
advertising mediums for advertisers mainly because
of their reach, interactivity and measurement models.
Mobile and social advertising are growing but are still
small in the overall digital ad spend. Video advertising
is also gaining prominence; advertisers are looking at
ways to reinforce their marketing messages on multiple
screens to maximize impact by integrating video-related
advertising into their overall digital advertising mix. Some
of the top digital spenders (sectors) during FY 2012-13
were Auto (13 per cent), BFSI (12 per cent), Travel (12 per
cent) and Telecom (14 per cent).37
The revenues in the Indian market are largely driven by off-deck content monetization through operator billing as
against International app stores (Play store /Windows/ IOS). This comes from the fact that there are much higher
number of feature phone users in the country who only have access to operators on-deck/off-deck content, in
comparison to the relatively smaller number of smartphone users. For many players in the market, bulk of the traffic and
revenue is coming from the rural belts where users connect largely via Internet enabled feature phones. With TVs left
inaccessible during power cuts, rural users many a times are left with mobile as the only source of entertainment and
this is driving the heavy usage in these areas. The Indian market as a result is also home to an increasing consumption
of vernacular content majorly coming from tier-II, III cities and rural areas of the country.
- Sameer Ganapathy
VP & Head
Interactive, Disney India
34.
35.
36.
37.
Samsung Press release in Times of India, 13 Aug 2013

Industry discussions conducted by KPMG in India, KPMG in India analysis
Economist Intelligence Units (EIU) Good to Grow? report 2013
IAMAI-IMRB Digital Advertising in India, 2013
106
107
Digital ad spend split by category, India 2013
Net Mobile Internet Ad Revenue Share Worldwide

by Company - 2013
Source: eMarketer newsletter, 13 Jun 2013
There is still a large gap between the budget allocated

by advertisers for TV or Print media vis-a-vis the amount
spent online. However, the traditional mindset is changing
which is evident in the increase in marketing spend in the
mobile, social and video advertising space.
Mobile advertising in India
Source: IAMAI-IMRB Digital Advertising in India, 2013
Google and Facebook together account for 66 per cent

of global mobile ad revenues.38 Google dominates the
mobile ad landscape, with a 48.76 per cent market share
while Facebook is still a distant second even though it
increased its share from 5.34 per cent in 2012 to 16.91 per
cent in 2013.38
Net Mobile Internet Ad Revenue Share Worldwide

by Company - 2012
37.99%
Others
1.47%
Twitter
2.70%
Pandora
Source: eMarketer newsletter, 13 Jun 2013
38. eMarketer newsletter, 13 Jun 2013
52.50%
Google
5.34%
Facebook
When the customer data usage saw a shift from telcoowned on deck WAP portals to mobile sites and off-deck
apps, leading telcos forayed into mobile advertising
through in-house services or strategic alliances with
mobile ad exchanges. This enables better control and
provides better mobile advertising opportunities to reach
the right audience based on demographics, spending
power, network usage, location, content relevance and
device specific data. Airtels partnership with Vserv.mobis
AudiencePro platform is a case in point.
Mobile advertising formats have evolved from basic
banner ads to rich media such as HTML5 ads, video
advertising etc. Native mobile advertising and location
based services are also gaining traction with right content
and context that is designed to merge seamlessly
with the app without interrupting the user experience.
While telcos and internet-first companies were the
early adopters of mobile advertising in India, 2013 saw
newbies such as FMCG, retail, apparel experiment with
the platform. With larger number of launches lined-up,
auto industry may also actively utilise this platform and
increase their mobile media spends in 2014.
The Digital advertising ecosystem

Simple representation
Internet
Advertiser
Agencies
(Media planner/Buyers)
Publisher
Audience
Multi-tiered network
AD
Network
Advertiser
Agencies (Media
planner/Buyers)
D
S
P
Agency
Trading Desk
AD Exchange
(RTB)
Audience
Network
Programmatic
buying
S
S
P
Publisher AD Server
Extended representation
Publisher
Audience
AD Flow
Revenue Flow
Source: KPMG in India Analysis
Definition
Advertiser
Agencies
Examples
Seeks to promote goods or services via online/mobile properties
Flipkart, HUL, Axis Bank
Develop media plans and buys publishing media for the
Group M, Carat Media, Allied Media
advertiser
Agency Trading Desks
Support agencys internal teams who wish to tap into this

new digital ad buying model on behalf of their clients
Ad Networks
Publicis Audience on Demand, WPP

Xaxis, Accordant Media
Ad network companies buy ad spaces from different
Google AdWords, AOL Ad Desk,
publishers and sell the ad inventory to advertisers or
AdRoll
agencies
Audience Networks
Audience networks sell ad spaces to advertisers or
Google Display Network, LinkedIn
agencies, targeting their ads based on audience online
Audience Network, AT&T AdWorks
behaviors, context, demographic, search and other surfing

patterns irrespective of publishing websites
DSP
Demand Side Platform (DSP) is a technology platform
Google Invite Media, MediaMath,
that allows advertisers or agencies to manage multiple ad
DataXu
exchange accounts through one interface
108
109
Ad Exchange - RTB
Definition
Examples
Ad exchanges are technology platforms that facilitate
Google/DoubleClick Ad Exchange,
real-time bidding of ad inventory- buying and selling of
Right Media, AD ECN
online media advertising inventory from multiple ad

networks
SSP
Supply side platforms (SSP) are technology platforms that
Google Admeld, OpenX Lift, PubMatic
help publishing websites to get best prices for their ad

inventory and enable them to manage the demand and
supply to targeted ads effectively on their sites
Publisher
Owns the online/mobile properties where the ads are
Times of India, Rediff, Yahoo!
displayed
Social media ad spend rising

The lure of social media advertising often draws brands
who find a fractured media landscape ahead of them. It
affords targeted reach and immense opportunities for
engagement with the intended customers. Recognizing
this, Indian corporates have increased the social media
spend to 13 per cent of their digital advertising budget in
2013, from 10 per cent in 2012.39
Social media ad spend mix in India
12%
Sponsored/
promoted
content
8%
Video
Display ad spend mix
5%
Text links
75%
Display
Source: IAMAI-IMRB digital advertising in India, Mar 2013
Search and Display advertising

With a growing number of consumers turning to their
phones to search for products, information and local
businesses like never before, search is turning local and
mobile. Display and search advertising are dominating
the online advertising market with a combined share of
67 per cent in India39. With the adoption of Ad Exchanges,
39. IAMAI-IMRB digital advertising in India, Mar 2013
advertisers have more control on ad buying (search and

display) and the return on investment is mostly easy to
calculate with standardised measurement metrics (CPC,
CPM, CPA etc.). Search and display ads are measurable
advertising forms, effective medium for remarketing and
help engage with consumers in real-time. Enhancing the
ROI from search and display ad spend requires content
and context to play an important role.
Source: IAMAI-IMRB digital advertising in India, Mar 2013
Focus to create made/customise for mobile

services
Search ad spend mix
Over the past couple of years, global internet giants such

as Facebook, Yahoo! and Google have increased their
focus on mobile considerably. However, these companies
arent the only ones feeling the pull to go mobile.
Brands across India are recognizing that the number of
smartphones and tablets are growing faster against the
declining numbers of the classic desktops, and hence
investment in mobile strategies could become imperative.
Overall smartphone shipments for Q32013 to India stood
at 12.8 million (229 per cent YoY growth) against only 3.24
million PCs shipped (8.4 per cent YoY growth).42
15%
SEO
85%
SEM
Source:IAMAI-IMRB digital advertising in India, Mar 2013
2013 highlights: The year gone

by
India became the worlds third largest
internet user base in 2013, overtaking Japan
Following USA and China, India became the third largest
internet user base in the world by unique visitors. It
overtook Japan in March 2013 and registered a YoY
increase of 31 per cent.40 This is a harbinger of great
potential that the internet medium brings with it.
In July 2013, TRAI announced the decision to redefine the
minimum speed for broadband to 512 kbps and above
from the earlier norm of 256 kbps. The redefinition makes
it mandatory for telecom operators to offer at least 512
kbps speed when selling broadband services to their
customers. The move is intended towards increasing
reach of higher speed connections in the country. In
order to comply with TRAIs new definition of broadband
and retain customers, telecom operators may now
need to ramp up their network along with making other
upgrades.41
Total unique visitors 2013 (in millions)

400
Google - Googles increased focus on mobile is reflected

in the launch of multiple mobile products, globally and
recently in India. Google has also admitted to its focus
on voice search which is most applicable to mobile,
users who are on the go and have a harder time typing.
The most recent Search algorithm update released in
Sep 2013 from Google-Hummingbird is believed to
provide better user experience as more and more users
speak their searches into their smartphones. It will
help to address the increasing mobile search queries
via voice search while understanding real speech and
conversational patterns. From multiple updates to the
Chrome mobile app to offering search and Google+ in
vernacular languages and to introducing new metrics to
measure mobile conversions for advertisers on Ad words
and investments in upcoming wearable devices such as
Google Glass, all reflect Googles enhanced focus on
mobile.
Facebook Facebook, in 2013, evidently shifted its
priorities to focus on mobile and on native apps for all the
major mobile operating systems. With almost 81 per cent
of its monthly active users in India coming from mobile,
it is a move in the right direction.43 The company put in
efforts to make the product accessible irrespective of the
platform - iOS, Android, BlackBerry, Windows, and even
on classic feature phones. In 2013, Facebook worked with
telephone provider Nokia in the Indian market to introduce
handsets with Facebook pre-installed on the devices.
These mobile devices are called Nokia Asha series
phones and have been designed to deliver a smartphonelike experience even on low cost handsets.
The shift in focus has delivered results for the company in
India with Facebooks mobile usage in India growing from
62 million monthly active users in Q22013 to 75 million in
Q42013.43
348.2
350
300
250
191.4
200
150
100
73.9
73.6
62.6
62.1
India
Japan
Russia
Brazil
50
0
China
USA
Source: Comscore India Digital Future in Focus, 2013
40.
41.
42.
43.
Comscore, India Digital Future in Focus, 2013

TRAI press release, July 2013
IDC press release, 2 Dec 2013
Facebook quarterly press releases
110
111
Mobile monthly active users (MAUs), Facebook

India (in millions)
The global internet giant is already reaping benefits from

these investments with increase in mobile user base.46
It is estimated that Yahoo! Cricket already has a larger
mobile user base as compared to the user base for PC/
desktops.46
80
75
75
70
India, now more comfortable with online

and mobile payments
65
62
60
A few years back, for many Indians, booking railway

tickets online was their introduction to internet shopping.
The government railway ticket booking portal IRCTC
and few travel sites revolutionised the eCommerce
industry in India and consequently the concept of online
payments.
55
50
Q2'13
Q4'13
Source: Facebook quarterly press releases
A similar trend has been observed globally too.

Facebooks global mobile usage grew by 39 per cent
from 680 million monthly active users (MAUs) in Q42012
to 945 million MAUs in Q42013.44
Mobile monthly active users (MAUs), Facebook

Global(in millions)
945
1000
900
800
700
819
874
751
680
600
500
400
300
200
100
0
Q4'12
Q1'13
24-hour contest for mobile app developers based on the

theme Mobile and Personalisation, in Hyderabad in July
2013.
Q2'13
Q3'13
Q4'13
Source: Facebook quarterly press releases
Yahoo! Yahoo! has been increasing its focus on its

offerings for the mobile medium. In order to strengthen it
mobile value proposition, it acquired multiple companies
in 2013 such as GoPollGo, Stamped, Loki Studios, Tumblr,
Playerscale, Ghostbird software, Jybe, Summly, Qwiki,
Astrid 45 to expand its product portfolio. Most of these
acquisitions have been in the mobile application space
and have added to Yahoo Mobile Properties and Apps
portfolio. Yahoo!, as part of its mobile-first strategy has
also introduced a set of mobile apps such as Yahoo! Mail,
Yahoo! Cricket, Weather and News that claim to have
earned the company most of its mobile user base in
India38. Yahoo! also organized a Hackathon which was a
44. Facebook quarterly press releases
45. http://mashable.com/2013/07/31/yahoo-marissa-mayer-20-startups/
Indians are now becoming comfortable with electronic

as well as mobile payments. More and more consumers
are opting for online and mobile platform payments that
provide extra convenience.
The highest growth rate by volume amongst online and
mobile payments systems was observed in mobile
wallet transactions that grew by 106 per cent in Dec
2013, over Dec 2012, followed by mobile banking
which grew by 70 per cent.47 Retail Electronic clearing
transaction volume (including ECS, EFT/NEFT and IMPS)
grew by 54 per cent, and majority of the growth was
contributed by Immediate Payment Service (IMPS)
transactions as their volume observed a 1655 per
cent growth rate.47 In absolute terms, the number of
IMPS transactions is still low when compared to other
systems, and due to a low base effect the per centage
growth rate for IMPS may seem high. Nevertheless, the
growth has been noteworthy. The data signals a sharp
rise in mobile fund transfers in the country. Indians are
now transacting more frequently using mobile devices as
compared to previous year, and the trend is expected to
continue through 2014.
Growth in payments by the value of transactions was
also led by mobile payments. The highest rate of growth
was observed for mobile banking that grew 278 per
cent followed by mobile wallet at 63 per cent39. Retail
electronic clearing transactions value witnessed a
growth rate of 49 per cent in Dec 2013 against Dec
2012.47 Majority of growth in value for this category
again was led by IMPS transactions that grew by 2900
per cent.47 It is obvious that consumers in India are not
just becoming more comfortable with online and mobile
payments but are also warming up to transact higher
values through these new payment channels.

47. RBI Payment Systems Indicators Reports 2013, KPMG India Analysis
Payment systems in India, Dec 2012-Dec 2013

300%
278%
250%
200%
150%
106%
100%
54%
50%
49%
63%
70%
16% 14%
0%
RTGS
Retail
Electronic
Clearing
% growth in transaction volume
Mobile Wallet
Mobile Banking
% growth in transaction value
Source: RBI Payment Systems Indicators Reports 2013, KPMG India Analysis
Retail Electronic Clearing, Dec 2012 - Dec 2013

3500%
2900%
3000%
2500%
2000%
1655%
1500%
Online card payments in India are also growing at a

fast rate of about 50 per cent YoY and are estimated
to surpass physical card transactions soon which are
growing at a rate of approximately 35 per cent YoY. 48
Approximately, one in four card transactions in India,
currently, are already taking place online. The number
of card transactions per month grew by 19 per cent in
volume to 659.5 million and 17 per cent in value to INR
1,928 billion in Dec 2013.49
RBI is doing its bit by empowering payment companies
to facilitate more digital transactions in order to create
competitive tension between existing players and the
countrys biggest banks and telcos which have failed
to unleash the full potential of new technologies so
far. In 2013, RBI granted new mobile wallet licenses to
Reliances Jio Money, MobikWik Wallet, Idea cellulars
Mobile Wallet, TATA Tele-services mRupee, One97
Communications Paytm, and Tech Mahindras Mobo
Money.50 The existing players in the mobile payments
space such as Google Wallet, Airtel Money, Zipcash,
SBIs Mobicash Easy, Tatas mRupee, Vodafones mPaisa
and Zees Itzcash etc. are already working towards
making payments more convenient for the end user.
Lack of awareness and lack of trust in such initiatives
has been halting the expected rise in adoption of
Mobile Wallets system in India. However, the mindset
is changing for good and offers a ray of hope to the
stakeholder companies. The overall Asia-Pacific mobile
wallet market is estimated to be worth USD 74 billion in
transaction value currently, and is set to reach USD 165
billion by 2016.51
The leading players in the mobile payments space are
achieving success already,
1000%
500%
0%
11% 21%
48% 88%
70% 47%
ECS DR
ECS CR
(includes NECS)
EFT/NEFT
% growth in transaction volume
Airtel Money
Interbank Mobile
Payment Service(IMPS)
% growth in transaction value
Source: RBI Payment Systems Indicators Reports 2012 and 2013, KPMG India Analysis
Consumers trust in online transactions is positively

impacted by launch of innovative online/mobile payment
systems (Google Wallet, Airtel Money etc.), as well as by
various efforts from the state governments and RBI, such
as the implementation of the 3D secure authentication
system online and the introduction of IMPS. IMPS,
promoted by the National Payments Corporation of
India (NPCI), enables customers to make payments to
merchant portals without any internet connection. The
Government has also launched Government e-Payment
Gateway for handling government related payment
transactions. Additionally, the push from some public
organisations to shift utility payments such as electricity,
telephone, water bills and insurance to online platforms
is also increasing online payments familiarity with Indian
consumers.
Launched by Airtel in Feb 2012.
Available in 27 states
Active user base of 1.3 million by Dec 2013
Estimated to have gathered business worth INR12.4

million with 30 million transactions for the quarter
ended December 31st 2013.
Average value per transaction at INR406.
mPesa
Launched by Vodafone in alliance with ICICI bank in

Dec 2012.
Currently available across 11 states
More than 300,000 registered users
Focused on a national roll out in 2014.
Has been a huge success story in Kenya in

partnership with Safaricom
48. http://timesofindia.indiatimes.com/business/india-business/25-card-payments-take-place-online/
articleshow/22530589.cms
49. Source: RBI Payment Systems Indicators Reports 2013, KPMG India Analysis
50. Source: RBI
51. Gartner Press release, June 4, 2013
112
113
mRupee
Launched by Tata Teleservices in Jan 2013
Available across 15 cities
More than 130,000 users
Over 250,000 transactions per month
Average transaction value of INR3,800
Roll out to 26 cities and 4000 retail outlets planned by
March 2014.
Money on Mobile
Launched in 2010
New regulations from TRAI, combined with the increasing

adoption of HD channels that feature shorter breaks, are
forcing a decrease in supply of advertising time on TV and
an obvious increase in rates by channels. All leading TV
channels, in order to compensate for the lost revenues,
increased ad rates by 30-35 per cent in 2013.52
Rising costs on TV and marketers budgets not increasing
in proportion to the increase in advertising rates are
driving advertisers to increase their investments in digital
platforms at a rate higher than that observed for TV. Digital
ad spend is estimated to grow at a CAGR of 27.7 per cent
from the year 2013 to 2018 against an estimated 13.2 per
cent CAGR for TV ad spend.53 There are likely to be more
ads on TV that will mention Watch the rest on YouTube
and growth of second screen apps to shift users to
digital platforms.
More than 75 million unique users

Approximately INR 824.5 million worth transactions
per month
Digital ad spend vs TV ad spend in India, 2013(E)

2018(P)
About 400,000 transactions per day.

Source: http://www.informationweek.in/informationweek/press-releases/286788/
tata-docomo-expand-flagship-money-remittance-service-mrupee-26-citiesfy14, http://beforeitsnews.com/science-and-technology/2013/12/vodafoneintroduces-mpesa-service-in-gujarat-plans-pan-india-by-2014-2661992.html,
http://www.watblog.com/2013/11/08/mobile-money-ids-grow-gradually-buttransactions-appear-healthy-npci-report/, http://www.businesswire.com/
news/home/20131114005063/en/Calpian-Inc.s-Indian-Subsidiary-Money-onMobile-Announces-October#.Uv3ebGKSyJQ
TRAIs regulations and HD channels with

shorter breaks on TV are driving advertisers
to online medium
TRAI introduced multiple advertising related regulations
on TV channels in 2013, such as:
Only 12 mins of advertising on a broadcast channel TV
in an hour, including house ads
Time gap between ad breaks and programming should
be at least 15 minutes, except if it is a live sporting

event
Only full screen advertising allowed. No popup, part
screen ads or drop down advertisements.
52. Press articles( http://www.livemint.com/Consumer/R6RHQh9RwLbdIGdoEgeIBN/Channels-hikead-rates-to-offset-time-limit.html , http://www.medianama.com/2013/03/223-impact-of-indias-tvadvertising-limits-on-digital-digital-first/ )
Digital Video takes on TV An imminent reality
Gautam A. Patel
Managing Director,
Zodius Advisors
As the world embraces the Internet of Things, India is beginning
to embrace the Digital of Things with 900 million mobile
subscribers, a USD6 billion e-commerce industry, online payment
transactions growing at 10-15 per cent month-on-month, 146
million cable homes rapidly getting digitised, and Google Hangouts,
Twitter, Facebook/WhatsApp and YouTube evolving as the
communication mediums of choice for our people, government, and
businesses.
The Indian population at large (locals and NRIs) are adopting digital
habits for the following reasons. First, we are a nation of young
people with 500 million people below the age of 25 years; a perfect
fit into the most active global digital demographic of 14-45 years.
Second, we have leap-frogged mass computer adoption with our
900 million mobile connections of which 130 million subscribers
use low-cost smartphones. Third, Indians are used to paying for
entertainment; 146 million cable homes pay INR 200-300 per
month. Which is why young Indians are reaching out to their mobile
phones for sports, music, movies, social networking etc. And lastly,
with good telecom infrastructure and healthy competition between
telecom providers we have the lowest voice and data charges in
the world.
India is a rapidly developing economy whose consumers are hungry
for content. We are the #2 market globally for Facebook and
YouTube (55 million and 30 million users respectively), #1 globally
for film box office tickets (USD2 billion), and #2 globally in Pay TV
households (146 million). With incremental adoption of 3G wireless
broadband services and plans for 4G services next year. Moreover,
there are no current foreign ownership restrictions in India relative
to online content initiatives.
Currently, TV viewing in India is at 119 min/day while web and
mobile video viewing is at 28 min/day resulting in 5 billion video
views per month of which 40 per cent are viewed on the mobile.
YouTube is the largest video viewing platform. However, the thing
to note is that the mobile data addressable subscriber base is 50
million with paying capacity of INR 250-300 per month for 1GB
of entertainment content across video, music, and CBRT (Call
Back Ring Tones). With the web and mobile Advertising market
growing from USD400 million to approx. USD2.8 billion (internet
USD1.5b+ & mobile USD1.3b) and the Subscription market pegged
to be close to USD7 billion in the next 4-5 years it will prove a
win-win for the combined nexus of consumer-telecom carrier-video
content provider. In addition, telecom carriers in India are under
tremendous cost pressures (price competition and high licensing
costs) that they are aggressively promoting data services plans as
low as INR 250-300 per month for 1 GB (one of the lowest in the
world) and revenue shares with MVAS/Content providers at 40/60
to 50/50 compared to past rev-shares of 20/80 (majority to the
carrier). As a result telecom carriers will make bandwidth quality a
priority driving more data usage and revenues.
In the long-term the opportunity is on the mobile. India has 900
million mobile subscribers of which only 7 per cent use mobile data
services. However, 10-15 per cent or 120 million of the subscribers
are literate enough to use mobile data services. India mobile data
plans are some of the cheapest in the world at INR 250 per month
for 1GB. The high value (average monthly consumption INR600)
pre-paid and post-paid subscribers in India amount to 240 million.
Of these 240 million subscribers 20 per cent continue to use data
services after the first month and can afford a 1GB monthly plan
resulting in viewing 28 mins of online video per day. Mobile data
charges are expected to go down until saturation after which
charges will start to increase similar to what happened to voice/
sms charges in India.
The availability of low cost smartphones in India has resulted in
putting 130 million smartphones in the hands of young Indians. As
a result the Over-the-Top (OTT) market for Content and Mobile Apps
has exploded. Smartphone users are going directly to the interneton-mobile to access content; converting the Telecom provider into
a bandwidth pipe only. However, there is a dearth of good quality
palatable content available which is promoting entrepreneurial
opportunities in building businesses around content, media
technology, mobile data analytics, and online payments. In
addition, the advertising community has been completely reliant on
TV to provide them with reach. Advertisers and Brands are starting
to experiment with digital advertising (currently digital ad spend are
very low at 3-4 per cent compared to 20 per cent of total ad spend in
the US). Digital advertising has better efficacy and direct targeting
with the ability to track, measure, analyse and monetize real-time.
The opportunity for digital video is huge and exciting. However,
lets highlight some challenges and critical enablers. First, 3G
Telecom infrastructure build out is only at less than 50 per cent
across the nation. The remaining infrastructure build out should
happen and in a timely manner leading to 4G services. Second,
Telecom Carriers should continue to encourage the expansion of
the mobile ecosystem (mobile apps, mobile media technology,
data analytics, content production, etc.). Third, infuse private and
government capital to foster entrepreneurship in the digital sector.
Lastly, the sector has to get more efficient by providing the best
infrastructure, high quality user experience, good content, at a fair
price.
India has a similar opportunity in Digital that China had five years
ago. Our time has come to build the next wave of technology in
digital to service this burgeoning consumer demand for digital
video!
Gautam A. Patel. The views and opinions expressed herein are those of the authors and do not
114
115
Smartphone usage 2013: apart from chat

and social networking, most genres have
seen a decline in engagement
Average time spent per day on the smartphone reduced
from 2 hours and 39 minutes in Nov2012 to 2 hours
and 36 minutes in Nov2013.54 Chat and multimedia
content took the center stage in smartphone usage in
2013 and the trend is expected to be maintained in 2014.
Both categories, put together, constituted about 1/3rd
of the overall usage time totaling to 53 minutes per day.
Chatting applications garnered a time share of 30 mins
per day in Nov2013, which was a 2X increase compared
to Nov2012. Gaming is found to be another popular
activity on smartphones; an average user spent around 11
minutes per day on games in Nov2013.54 Most gamers
are light gamers and the time spent on games is just over
2 minutes. On the other hand, heavy gamers spent more
than an hour on gaming each day. Nearly, half of all heavy
gamers fall under the age bracket of 25 to 35 years.
Engagement on browsing declined on smartphones by 24
per cent in Nov2013, coming down to 29 minutes from
38 minutes in Nov2012.54 This could have resulted from
limited available user time with more time being spent on
chat, multimedia content and gaming applications.
Overall smartphone usage - Time spent (mins/day)
Source: Nielsen Informate mobile insights 2013
54. Nielsen Informate mobile insights 2013
According to the above data, radio, mobileTV and video

streaming witnessed a drop in daily engagement, with
Mobile TV observing the highest fall followed by video
streaming, all contributing to the reduction in overall
time spent on smartphones. Watching videos accounted
for a small portion of the overall pie. Users seem to be
diverting their attention away from activities that require
faster and better connections to activities such as chat
and social media apps that require lower bandwidths
and work well even with patchy 3G and 2G connections.
Issues with data network connections tend to lower the
quality of user experience while streaming videos on
mobile. These trends are important from the perspective
of content providers and app developers to tweak their
strategies according to shifting consumer behaviors.
Genre usage
69% 69%
71% 86%
Reach (%)
58%
62%
57%
75%
22% 28%
30% 28%
27%
47% 42%
13%
NEWS
Games
Time spent
amongst
Users
(min/day)
14.6 15.6
Chat
Social Networking
App Store
News
Radio
Mobile TV
Video Streaming
6.0 3.9
4.1 3.9
2.3 1.6
2.3 1.1
2.8 2.5
34.4
21.3
9.3 11.5
November12
November13
Source: Nielsen Informate mobile insights 2013
Portable devices, such as smartphones, tablets and laptops are seeing a distinct surge in consumption owing to
the increasing affordability. Buoyed by effective data plans, consumers are interacting through social networking
sites, and are participating in more conversations using chat messengers across devices. For brands a robust
digital strategy to directly engage with consumers is now a priority, as is reacting and responding to grievances that
consumers air on these same public platforms.
With the choice of content multiplying at dizzying speeds, the consumer is also getting distracted very easily. This
presents a scenario where marketers, media watchers, manufacturers and advertisers now have a far more fluid
consumer base, and keeping them engaged, and loyal while tapping into new groups will be an ongoing process.
- Prashant Singh
Managing Director,
Nielsen India- A global information and insights provider
Digital music: big exits mark 2013
YouTube offers a compelling proposition
2013 was marked by a few disappointments for the

digital music industry. Although, the overall industry
has shown growth, services poised to succeed in 2013
have faced trouble. Flipkarts music download store
Flyte was forced to shut down operations in 2013. As per
official statements from Flipkart, it is difficult for music
downloads business to reach a desired scale in India
due to problems related to music piracy and difficulty in
facilitating micro payments.55 Low credit card penetration
in India could be another reason dampening the growth of
online music sales. Dhingana, a music streaming service,
also closed down in 2013.
2013 saw YouTube follow the parent Google in rolling out

its movie rental and purchase program in India. Users can
now browse through both paid and free movies across
various genres and languages. YouTube offers movie
rentals starting as low as INR 25.56 Upon purchase, users
have 30 days to start watching the content and once
started, 48 hours of viewing time. Pricing is dependent
on resolution, popularity and recency of release. Regional
content forms a significant part of the inventory.
55. The Economic Times press release, 29 May 2013
56. YouTube
116
117
Sony LIV and Star Sports enter the VoD

market in India
The only thing holding back Digital media is the

data speeds and coverage, in spite of which
online and mobile viewership has shown
impressive growth. On digital media, unique and
exclusive content will always get value, while
me-too content will not. There is tremendous
scope for sports viewership online, given its
exclusive nature. However, for monetisation
beyond advertising on digital media to pick up,
payment mechanisms and piracy issues needs
to be resolved.
Multi Screen Media (MSM) launched their Video-onDemand (VoD) service, Sony LIV in India in Jan 2013 with
an ad-supported revenue model. This move will heat up
the competition in the VoD market with existing players
such as BigFlix, Box TV and Ditto TV. The service is focused
on offering current and past TV content from SONY, SAB
and MAX online, on mobile handsets and tablets. By the
end of 2013, Sony LIV had gained ~ 3 mn (per month)
unique users who, on an average, spend 10-11 mins each
per visit.57 Comedy is the most-viewed genre followed by
drama and thriller. In line with the industry trend, 50 per
cent of content on Sony LIV is viewed on mobile, 30 per
cent on desktops/laptops and 20 per cent on tablets. 57
Their mobile app has been downloaded 7 million times.57
The launch of starsports.com was another prominent
entry in the VOD market in 2013. The revenue model of
starsports.com, unlike Sony LIV, is not advertising but
subscription based. The service offers live streaming of
matches, live commentary in Hindi and English, match
fixtures and results. It currently offers content across
Cricket, Football, Hockey and Pepsi IPL. The service, at
present, attracts over 28 million unique visitors every
day with users spending, on an average, 45 minutes
per match.58 The service engages users with innovative
campaigns such as The Sachin memory project launched
in Nov 2013 which was a huge success. Sports coverage
has evolved from print to radio to television and now the
digital medium. Starsports.com aims to become the goto-destination for sports content online.
- Uday Shankar
Kobo launches in India

Kobo launched their e-reader devices and e-books service
in India in 2013. The International e-reader manufacturer
Kobo has a global market share of 20 per cent,59 2nd after
Amazon and has debuted 3 e-readers in India Kobo
Touch (INR 6,999), Kobo Glo (INR 10,999) and Kobo Aura
HD (INR 13,999).
Unlike the Kindle, Kobos distribution for its devices is
solely available offline at over 100 retail points in leading
bookstores across the country such as Crossword and
WHSmith as well as electronics retail store Croma.
Segment review
Search
The Internet is a web of networks. The more the
users, more content, the larger the network,
the more complex the web! The more complex
the web, the easier it is for pirates to set up
content piracy and monetization. At Sony, we
have been proactive at monitoring both online
and application-based content piracy. We do
regular sweeps and target IP infringement.
As a broadcaster and a content company, it
adversely affects profits, jobs, creativity and
brand equity. While these sweeps help, with
rapidly technology and code enhancements,
we are always playing catch-up. We need an
active forum with cooperation from the entire
eco-system between tech/web players, content
owners, advertisers and the government.
India is the fourth largest audience of online searchers

in the world.60 After years of stability, online search has
entered an era which is characterised by rapid change.
A few years ago, searches were likely to return similar
results for any number of unique users. Today, a search
produces personalised results and includes various
elements other than traditional text results, such as,
images, videos, maps and local content as well. For the
user, relevant and valuable information is the obvious
advantage; however, marketers are delving deep into
the art and science of search engine optimization and
marketing.
- Nitesh Kripalani
Executive Vice-President,
New Media, Business Development & Digital/
Syndication, Multi Screen Media Private Limited

58. http://www.indiantelevision.com/iworld/enews/starsportscom-youtube-of-sports-in-india-140207
59. http://www.digitaltrends.com/mobile/kobo-touts-millions-of-sales-in-2012-despite-lack-of-usexposure/
60. Comscore: India Digital Future in Focus, 2013
Unique searchers in India grew by 28 per cent

against 6 per cent worldwide
Google is the largest, most popularly used search

engine in India
Composition of internet searches in India
Key search statistics: India

67.5 million unique searchers
6.4 billion searchers
90%,
Google
Sites
7.6 billion search result pages
Yahoo!
Sites
1.6 billion search visits
Ask
Network
Source: Comscore: India Digital Future in Focus, 2013
Facebook
All Other
Growth in unique searches in India,Mar12 Mar13

80
28%
70
60
67.5
52.6
50
40
30
In 2013, Indian netizens spent around 33.5 minutes per

month on internet searches, out of which 90 per cent
searches were on Google sites.64 Google has taken a
stronger position on mobile Search Engine Optimisation
(SEO) and even threatens to demote sites which are not
mobile friendly on mobile search results.
20
Social Media
10
The Indian social media landscape has turned into

an influential medium for information exchange and
engagement. India is amongst the fastest growing
markets for Social Media usage, with an estimated
increase of 37.4 per cent in user base in 2013.65 It is
estimated that, in 2013, 86 per cent Indian web users
visited a social networking site.64
0
Mar-12
Mar-13
Googles revenues in India were reported at INR20.77

billion in 2013, a considerable growth of 78.7 per cent
from FY 2012.61 Although these figures do not reflect
the strategic importance of the Indian market, especially
when compared to its annual global revenue of INR3,000
billion (2012), India remains one of Googles fastest
growing major markets.62 Googles advertising revenue
from the SMB sector in India is growing by triple digits in
the last two years with higher adoption rate.63
Social network user penetration in India increased

from 7.7 per cent in 2012 to 10.5 per cent in 2013.65 This
penetration is estimated to reach 17.2 per cent by the end
of year 2017 against global social network penetration
projected at 31.5 per cent.65
Social network user penetration in India (per cent

of the population)
10.50%
7.70%
61.
62.
63.
64.
65.
Indias Registrar of Companies, Medianama

Forbes India feature-Is Google gobbling up the Indian internet space, 22 Jul 2013
ZDnet press article, 28 March 2013 - India fastest growing SMB market for Google AdWords
Comscore: India Digital Future in Focus 2013
eMarketer newsletter, 19 Nov 2013
2013
Source: eMarketer newsletter, 19 Nov 2013
2014 (P)
118
119
For a country that accounts for 1/6th of the

worlds professionals and a growing young
population, it comes as no surprise that
LinkedIns user base in India has grown almost
500 per cent since inception in late 2009. With
prolific growth in internet users, a huge mobile
user base and a growing number of users
accessing social media through mobile phones,
it clearly seems that the social media revolution
is set to expand even faster in India. The future
looks promising primarily because social has
evolved to the point where we can have scale
(reach) and personalisation (relevance), thereby
making it much more effective than traditional
media in India, where one inherently has to
tradeoff between the two.
- Nishant Rao
Country Manager,
LinkedIn, India
Facebook is leading the charge with 44 per cent growth

in 2013 where an average user spent 217 minutes every
month on Facebook.66 LinkedIn emerged as the second
most visited social network with a typical user spending
an average time of 18.7 minutes.66 Social media has a
major impact on business as customers are increasingly
using social media channels for product comparisons,
price discovery, information and shopping. Organisations
continue to explore the possibilities that social media has
to offer to reach new customers and enhance customer
experience.
The table below shows the growth of social media sites in
2013 in terms of unique visitors from PCs. Facebook lead
the charge with close to 60 million unique visitors visiting
the site followed by LinkedIn with 11.12 million unique
visitors.66 Pinterest and Tumblr registered a growth of 589
per cent and 130 per cent respectively and emerged as
the fastest growing networks in 201366 though the unique
visitor base is low. While all other social media sites saw
a positive growth rate in terms of unique visitors in 2013,
Twitter saw a decline of 15 per cent compared to last year.
Though all social media sites are competing for gaining
traffic, engagement and eyeballs in the market, they have
developed a unique appeal among different demographic
user groups. While Facebook is widely accepted across
user groups in India, LinkedIn is popular among working
professionals, students and high income households.
Pinterest is highly popular among female users whereas
Twitter is favoured among young urban adults.
66. Comscore: India Digital Future in Focus, 2013

67. Times of India article Gujarat tops in social media users via smartphone, 31 Aug 2013
68. eMarketer newsletter, 19 Nov 2013
PC traffic and network growth on social media

sites, 2013
Social Media
Channel
Unique
visitors (000)
Minutes per
visitor
YoY increase in
unique visitors
Facebook
59,642
217
44%
LinkedIn
11,127
18.7
58%
Twitter
3884
9.1
-15%
Pinterest
1514
9.2
589%
Tumblr
1855
7.9
130%
Gujarat emerged as the state with highest number of

users accessing social networks through smartphones
compared to the corresponding numbers in any other
state in India. Ahmedabad had 60 per cent users logging
into the networking sites using their smartphones
whereas 51.6 per cent of users accessed social networks
through smartphones in Delhi and 55.2 per cent in
Mumbai. Other cities in Gujarat including Surat, Vadodara
and Rajkot also made it to the list of high number of social
media users through smartphones, with over 56 per cent
users.67
India is expected to have the largest Facebook population
by 2016. While the US remains the country with the
highest number of Facebook users (146.8 million in 2013),
India, which comes in a distant second is set to have the
worlds largest Facebook population by 2016.68 There are
currently 93 million Facebook users and it is estimated
that 2 million new users are adding every month in India.69
Search and Social media: They can no longer

operate independently
Integration of social and search makes perfect sense
when businesses aim to cater to the evolving customer
behavior. Digital technologies have not only transformed
the way people use social media, but have also led search
to become increasingly influenced by social signals.
Search engines such as Google and Bing are aggregating
feed data from social networking sites such as Google +,
Facebook and Twitter for improving search engine results
and personalize them according to the customer needs
and preferences. Googles Social Search patent (granted
in July 2013)70 discussed the relevance of relationship
connections in a social network and revealed that search
engines can use these connections to answer searchers
queries in a better way. The patent also details out
measuring of trust by intimacy as opposed to authority.
For instance, a customer is likely to trust a family
members recommendation when compared to that of an
anonymous reviewer online.
69. Press release, ZDnet - 4 Feb 2013

70. Media Post article Google secures patent for social search, 26 Jul 2013
Online classifieds
Online classifieds: a major market
Online classifieds began in the US and since inception
online classifieds websites have snatched USD 3.5
billion worth of ads from American newspapers. A similar
development is also taking place in India. The classifieds
ad budgets have started migrating to the online media
from print.
as other assorted ads. Globally, the classifieds market is

pegged at USD 12.5 billion and accounts for 20 per cent of
global online ad revenues.71 In India, the size of the online
classifieds industry was estimated at INR 18 billion at end
of 2013 and it is expected to grow to about INR45 billion
by 2018 with a CAGR of 20 per cent.72
Indian online classifieds market

50
45
45
Increasing share of online classifieds market (by

revenue) in India
40
32
INR Billion
35
30
26
22
25
20
38
CAGR - 20%
18
15
10
5
0
2013 (E)
2014 (P)
2015 (P)
2016 (P)
2017 (P)
2018 (P)
Source: Industry discussion conducted by KPMG in India and KPMG in India Analysis
Source: Netscribes, Centrum Broking (http://bsmedia.business-standard.com/_media/bs/data/marketreports/equity-brokertips/2013-09/13800961410.81028400.pdf)
Thanks to the growing number of internet users,

every classified ad posted online reaches millions of
users throughout the length and breadth of India. The
major categories among internet classifieds are jobs,
matrimonials, automobiles, education, real estate, as well
Favorable demographics, new-age young entrepreneurs

and growing business services sector seem to be driving
the online classifieds market in India. Internet enabled
Tablets and mobile devices play an important role in the
continued growth of online classifieds to a considerable
extent. To help things along, numerous online properties
such as websites, mobile sites, apps, games, videos
etc. have appeared on the internet highway that actively
support the online classifieds industry. The online
classifieds industry grows unabated, and mature listed
players are growing at 20 per cent or more.73
Online classifieds models in India

Strategic segments
Categories
Key players
Revenue model
Horizontal classifieds
General (Noncategory specific)
Olx, Quikr, Sulekha, ClickIndia,

Justdial
Online advertising, featured listings,

Paid listings and value added services
Vertical C2C
Classifieds
Matrimony
Shaadi, JeevanSathi,
Bharatmatrimony
Paid memberships
Vertical B2C
Classifieds
Auto
Carwale, Cardekho, India

Automobile
Lead generation, Paid listing,

Subscribtion fees from dealers, Auto
Financing, Auto Insurance
Real estate
99acres, MagicBricks,
Indiaproperty
Paid listing, Fees from developers,

builders and brokers
Food and
entertainment
Zomato, Burrp
Paid listings
Recruitment
Naukri, Monster, TimesJobs
Job listing, Employer Branding, access

to database, VAS
Growth Drivers
Growing internet user

base
Growth in digital ad
spend
Young population
/positive
demographics
New ventures and

growth in service
sector
71. Zenith Optimedia - http://www.kbridge.org/en/online-classifieds-choosing-a-successful-strategy/

72. Industry discussions conducted by KPMG
73. Press article http://www.thehindubusinessline.com/industry-and-economy/bringing-buyers-and-sellersonline-is-the-major-challenge/article5010374.ece
120
121
Job classified sites are the most popular segment in

India
With the employment situation as it is in India, there
is no wonder job seekers flock to online job classifieds
sites in the hope to find a fresh job or a better job. With
the growth in IT services, banking and manufacturing
sectors in the recent past, most recruiters are highly
dependent on online media to reach the vast talent pool
available in India. All this has contributed to recruitment/
job classifieds growth and became the largest category
in online classifieds and a preferred medium of hiring
in India. Around 3.15 million resumes were uploaded in
December 2013 compared to 1.05 million in November
2012. The number of online job seekers was estimated
at 25 million in 2012-13 and the number is set to increase
to 50 million in 2016-17. People in age group 21-35 years
showcased high interest in the job portals in 2013.74
Followed by matrimonial classifieds
Matrimonial classifieds on the internet are a growing
business in India and millions of users have taken to
posting ads on them. From INR5.2 billion at present, the
online matrimony segment will acquire a market size of
INR15 billion by 2017 and this will be possible because of
convenience and cost-effective services afforded by this
segment.75 The online matrimony services are estimated
to grow at a CAGR of over 65 per cent in the next two
years.75 25-34 years is the fastest growing age group for
the matrimonial classified segment.75 A few companies
providing platforms for matrimonial postings have started
providing counseling services and free books on the dos
and donts of a happy marriage to mailers and links to
social media and blogs.76
Horizontal classifieds: scaling new heights
The major horizontal classified websites witnessed
200-400 per cent growth, with 40-50 per cent of traffic
coming from mobile devices.77 The estimated number
of visitors per month is 50-60 million. Almost 50 per cent
of searches came from mobile sites in 2013 compared
to only 15-20 per cent in 2012. The horizontal classifieds
with a CAGR of 50 per cent in the last two years was
notably ahead of the 26 per cent CAGR for India internet
over the same period.77 Paid listings, advertising and
lead generation services have been the primary revenue
drivers for these players.77
Source: Industry discussions conducted by KPMG in India
Gaming
The gaming industry is gaining traction at a steady rate in
India. The growth is driven by a rising younger population,
higher disposable incomes, introduction of new gaming
genres, and the increasing number of smartphone and
tablet users. The proliferation of gaming developers
and publishers has also contributed to the growth of
the gaming industry. The gaming industry in India was
estimated at about INR 19.2 billion in 2013 and is poised
for continuous growth.79 However, the year gone by
witnessed flat volume growth in the console segment
specifically and this impacted the overall industry growth
rate. Industry players are optimistic about 2014. The
industry is expected to grow at a CAGR of 16 per cent and
touch INR 40.6 billion by the end of 2018.79
Gaming market in India, 2013(E) 2018(P)
Online classifieds sites such as Quikr and OLX have

seen business coming from semi urban and rural areas
in states such as West Bengal, Tamil Nadu, Karnataka,
Maharashtra, Orissa, Assam and Uttar Pradesh.78 The
major metros are the main sources of traffic to these sites
but the rural market is catching up and would account for
50 per cent of the traffic in the coming year.78
74. Press release, Assocham Rising trends & popularity of online Jobs and Matrimonial Alliances 17
Dec 2013
75. Press article, Assocham http://indiatoday.intoday.in/story/online-marriage-business-may-touch-rs1500-crore-by-2017-assocham/1/331691.html
76. http://articles.economictimes.indiatimes.com/2013-06-26/news/40206906_1_portals-onlinebharatmatrimony-com
78. Times of India article Rural India selling cows, buffaloes on OLX, Quikr, 11 Jun 2013
Last year had been a challenging year of reinvention of the Console gaming industry. There
is a change in the mass segment appeal of the
consoles with the withdrawal of the PS2 and
higher incidence of the smartphone gaming in
the wider and deeper markets. The year also
started seeing a higher involvement of core
gamers in the top 18 cities around PS3 / PS4 and
focused on the core gaming titles. We expect
the mass segment based on better quality
smartphone games to be wider in appeal but
also a faster rate of creation of core gamers
who will look for more immersive games on the
consoles.
- Atindriya Bose
Country Manager
Sony Computer Entertainment
volumes. Secondly, the prices points for the units sold

in India are higher than the corresponding price points
in US and UK because of high import taxes on both
console and the associated software. Thirdly, the game
development community catering to this segment is in
the nascent stage and has some catching up to do with
their counterparts in mature markets to match quality of
content.
Gaming console price comparison

Company
Sony
playstation
Console gaming
The console gaming market in India is currently estimated
at INR 8.4 billion.80 Some of the most prominent products
in this segment are Sony Play Station series and Microsoft
XBOX series. The growth of the console gaming market
has been slower when compared to online and mobile
gaming. Unit sales and attach ratios were impacted
because of the overall sluggishness in the economy and
frequent exchange rate fluctuations. Rupee weakening
against the dollar coupled with high import duties forced
the console gaming players to increase product pricing.
This, obviously, had a negative impact on the number of
units sold while the value of sales increased though only
marginally. The high profile launches of Sony Playstation
4 and of Xbox One are expected to help the console
segment regain lost momentum in 2014. The serious
gamers in India comprise 15-20 per cent of the total
gaming universe under the age group of 16-24 years with
99 per cent as males.81
While growth of console gaming can be seen in various
pockets across the length and breadth of the country,
Mumbai, Pune, NCR, Bangalore and Hyderabad are the
major markets for console gaming and other markets
such as Punjab, Gujarat, Chennai, Kolkata are growing
fast81.
The console gaming category in India is faced with
a few challenges which held back growth and user
adoption as was expected in 2013. Firstly, 80-90 per cent
business in this category is import driven, as a result,
of which exchange rate fluctuations have an impact on

81. Industry discussion conducted by KPMG in India, KPMG in India analysis
Xbox
Console
Price
PlayStation4 500 GB
INR39,990
PlayStation3 500GB
INR22,990
PlayStation3 12GB
INR16,990
PlayStation2
INR6,990
PSP (PlayStation Portable)
INR6,990
PlayStationVita - Wifi and 3G
INR16,990
XBOX One
launching in 2014
Xbox 360 4GB
INR15,990
Xbox 360 250GB
INR24,990
While the weakening of the INR definitely

created an adverse impact on the pricing of
imported products like consoles and console
game software, the bigger challenge for the
industry still remains in the form of high import
tax structure. The rationalization of the total tax
structure on the console games segment will not
just open up the India market, it actually has the
potential of switching on the game development
industry in a big way with a high impact of total
revenue for the Indian entrepreneurs and high
quality employment generation potential.
- Atindriya Bose
Country Manager,
Sony Computer Entertainment
122
123
PC and TV gaming
The PC and digital TV gaming segment in India is
estimated at INR 2.6 billion in 2013.82 This segment
is expected to grow at a CAGR of 22 per cent during
2013-2018, to touch INR 6.9 billion by the end of 2018.82
Single-player, single-session game comprises the
leading category of games played in this segment in
India. Positive response from gaming cafes such as
Reliance WebWorld and Sify i-way highlight the growing
popularity of PC gaming in India. On the other hand,
price competition among distributors and retailers and
internet piracy were seen to be the key challenges for this
segment. PC games sales are set to grow internationally,
with revenues expected to rise at 4 per cent every year.
Worldwide, sales are expected to grow over USD 24
billion by 2017, largely due to demand in BRIC nations
(Brazil, Russia, India and China).83
(2013-2018) to reach INR 19.6 billion by the year 2018.82

The market has been further propelled by the increasing
number of smartphone subscribers and a growing tablet
audience as well. Approximately, 90 per cent of the
mobile gaming market is held by Android OS followed by
a 5 per cent share with Windows and 2 per cent going to
iOS.84
Smartphone OS market share for gaming, 2013
2% IOS
5% Windows
3% Others
90%,
Android
Best-selling PC games of 2013 in India

Grand Theft Auto IV
Counter Strike: Global Offensive
FIFA 14
Max Payne 3
Assassins Creed IV: Black Flag

Source: Based on Flipkarts best-selling games of 2013 - http://www.videogames.net.in/best-sellinggames-of-2013-in-india/
The digital cable platforms offer a good potential for

gaming, which in turn could be a persuasive starting point
for entry level gaming audiences. However, the biggest
challenge is the fragmented cable operator network
and non-standardized low specification of hardware and
software platforms that fail to provide a good gaming
experience for users. The situation is expected to improve
when cable operators and consumers opt for next
generation android set-top boxes.
Online gaming has also evolved to provide an interactive
social experience. Social gaming is now considered the
most popular segment among online PC gamers. Social
games such as Farmville, Cityville, Candy Crush, etc.
have impacted consumers usage of social network sites
such as Facebook, which as a result emerged as one the
worlds largest PC online gaming platforms.
The mobile gaming revenues continue to be driven by

ads in India. Monetization still remains a key challenge,
as a minimal percentage of consumers intend to pay for
downloads and a large percentage prefer to play mobile
games available for free. The Freemium model has not
been a success in India so far. If the industry can crack the
Freemium model, it could disrupt the revenue model of
mobile gaming by turning a popular game into an ongoing
revenue stream for developers.
Data subscribers in India are going to hockey

stick 4X times from current levels. I expect
gaming to outpace this growth and multiply 5
times. The only caveat is that the publishers
must find a way to crack the freemium model
which has so far been largely unproven in India.
- Samir Bangara
Co-founder and Managing Director,
Qyuki
Mobile Gaming
With more than 900 million mobile phone users and
with rapid growth in youth population, India is one of the
largest and fastest growing mobile gaming markets in
the world. The penetration of mobile devices is higher
than that of PCs and consoles in India. The mobile gaming
industry in India was estimated at about INR 8.2 billion in
2013 and is projected to witness a CAGR of 19 per cent

83. IDC press release, Jan 21, 2014
While top games played on smartphones remain the

same across the different gamer segments, a key
differentiator is found to be time spent on each game.
Total Audience for Dec 2013
Engagement on top smartphone games in India,

2013
Games
Minutes/day
Subway Surfers
21
Temple Run 2
11
Hill Climb Racing
24
Angry Birds
18
Dr Driving
15
Source: Comscore India digital future in focus 2013
Source: Nielsen Informate Mobile Insights, July2013
Total Unique Viewers (000)

Close to 165 million apps are downloaded by
Indians off the iOS and the Google app store,
bringing in revenues of over INR 270 million
monthly. This makes India one of the leading
markets in terms of app store downloads.
Monetisation continues to remain a major
challenge for Indian apps and app developers
as free apps are the norm with Indian audience,
however, with improving quality and more locally
relevant content we should see the revenue mix
align with global trends with in-app purchases
comprising of the lions share as mobile gaming
becomes a INR 20 billion market by 2016.
- Jayont R Sharma
Chairman & CEO
Milestone Interactive Group
Video
Video-on-demand (VoD) growth remains steady
Online video category in India has seen steady growth
over the past year. The month of December 2013 has
seen a 16 per cent YoY growth.85 The 15-24 and 25-34 age
categories constitute the bulk of users contributing to ~
80 per cent of total users.
The Indian premium video space is at a tipping

point and we see a lot of consumption and
interest in streaming platforms such as BoxTV.
Mobile consumption is steadily increasing, given
the advantage of a personal viewing experience.
Family viewing is still catching up, but is poised
to take off as Internet penetration, bandwidths
and TV/TV-connected devices become more and
more prevalent in the country. Were constantly
exploring business models that will work best
in the Indian market scenario, trying to create a
win-win between our customers and our content
partners.
- Pandurang Nayak
Business Head,
Box TV
85. Comscore India digital future in focus 2013
124
125
YouTube already very strong for Video content

The VOD industry is in the nascent stage. The
industry dynamics would keep changing very
fast every 6 months for the next 3-5 years but
the growth will continue for about 10 years.
The content consumption behavior is evolving
and is moving from forced-to-see content to
search based, mood based, need based content.
The demand for original content is high but the
supply is limited. The trend, however, is changing
with more and more original content creators
joining the ecosystem which, ultimately, would
balance the demand and supply. We will see
more and more Digital Celebrities coming to
fore who will have a larger global audience and
fan following unlike the contemporary TV and
Movie stars. Innovative revenue models such as
engagement based advertisement and data or
traffic revenue will become prominent.
- Shabir Momin
MD & CTO,
Zenga TV
YouTube is the number one destination by traffic for

videos in India and is already becoming a meaningful
monetisation platform for content owners. YouTube, in
2013, constituted for approximately 58 per cent of all
online video views in India.87
Top Video Publisher Platforms In India By Unique

Visitors in 2013 (in millions)
35
31.5
30
25
20
18.6
15
8.2
10
4.3
3.7
2.9
2.4
Daily
Motion
Viacom
Digital
VEVO
Times
Internet
Ltd
5
0
YouTube Facebook
Waiting on 4G
The arrival of 4G is expected to promote the growth of
VOD services, especially in the long format segment.
However, players in this sphere do not expect 4G roll-out
before 2015. Currently, an estimated 15-20 per cent86
of traffic is driven through mobile but this is expected
to rise considerably with 4G. Akin to the digital music
industry, subscription video on demand services are yet
to take off appreciably in the country with most users
preferring the free, ad based service. Most video content
providers cater to Bollywood tastes with up to 50 per
cent of content from Bollywood with the rest composed
of English and Local Language content.86 As mentioned
earlier, internet speeds are a concern in the video
streaming sector.
During last 5 years, we have witnessed audio

and video transmission through digital platforms
on various devices. This trend will continue
and gain huge momentum as soon as Internet
speed increases in all countries. We will also
see books and the overall publishing industry go
through the same phase in which consumers will
prefer to access information on digital platforms
ONLY. The entire process will become more
sophisticated as mobile devices become more
powerful and affordable.
- Samir D. Khandwala
Founder & CEO,
iMusti

87. Comscore India digital future in focus 2013
Yahoo
Sites
Numbers of studios/content owners have built a

significant viewership of their YouTube channels
UltraViolet Your movies in the Cloud
Multiple production studios and content owners have

set up their channels on YouTube clearly to tap into the
massive user base and traffic the website receives.
Almost all the television channels/production studios
are uploading content on YouTube for free. This allows
users to stay up to date up with trends. The presence
is delivering results by way of huge traffic numbers and
constructive user engagement with the videos uploaded.
Top Studios in India by Traffic on YouTube Unique

Visitors in 2013 (in millions)
9.4
7.2
4.8
4.6
4.4
4.1
4.1
3.9
Since its October 2011 introduction, UltraViolet (www.UVVU.com)

has achieved significant milestones for industry and consumer
adoption, and is rapidly becoming an integral part of the Home
Entertainment landscape in the USA and beyond.
UltraViolet is the home entertainment industry standard to
download and stream movies and TV shows consumers own for
viewing on TV screens, personal computers, tablets and mobile
phones. It allows consumers to take full advantage of the benefits
of the cloud to view their movie and TV show library anytime,
anywhere. With a focus on consumer needs, UltraViolet:
Raj Shri Productions
Saregama
Star India
ZEFR
Shermaro Entertainment
EROS Entertainment
Universal Music Group
Sony BMG
Provides a breakthrough level of freedom and flexibility in

T Series Music
10
9
8
7
6
5
4
3
2
1
0
Ravindra Velhal
Global Content Policy and Standards,
Intel Corporation
how entertainment can be watched spanning downloads,

streaming and discs across TVs, computers and mobile devices
Eliminates fears of losing content (crashed drives, difficulty
transferring entertainment to new devices)
Addresses concerns about getting locked in by purchasing
entertainment tied to a single retail/device brand
Enables sharing among six family account members, with
personalized settings and parental controls
Top Studios by Engagement on YouTube in 2013

(Minutes per Visitor)
30
27.6
Multi-Platform Versatility: Consumers can add titles to their

UltraViolet library in three ways: 1) via new-release Blu-rays and
DVDs that come with UltraViolet, 2) by buying online or via apps
(EST) or 3) through a disc-to-digital program that upgrades
already-owned discs to add UltraViolet download and streaming.
25
20
15.3
9.2
8.9
8.8
8.3
7.9
7.3
Shemaro
Raj Shri Productions
Sony BMG
Saregama
Eros Entertainment
ZEFR
Universal Music Group
15
10
T Series Music
Star India
More Titles from More Studios: From catalog titles to new releases,
there are now more than 10,300+ UltraViolet-enabled movies
and TV shows from major content providers: BBC, DreamWorks
Animation, Fox, Lionsgate, Paramount, Roadshow Entertainment,
Sony Pictures, Starz Anchor Bay, Universal and Warner Bros.
UltraViolet members can download or stream to PCs, Macs, iOS

(iPad/iPhone) and Android devices. They can also stream to PS3/
Xbox 360, Internet TVs and connected Blu-ray Players from nearly
all leading brands. In the U.S alone, this equates to hundreds of
millions of devices.
Continued Retailer Rollout: Several retailers now offer UltraViolet,
including Access Digital (EzyFlix), Barnes & Noble (NOOK Video),
Best Buy (CinemaNow), Cineplex, Flixster, JB Hi-Fi (JB Hi-Fi NOW
VIDEO), Target Ticket, Kaleidescape, M-GO, ParamountMovies.
com, SonyPicturesStore.com, UniversalHiDef.com, and Walmart
(VUDU).
126
127
EBooks
International Expansion: Currently available in the U.S., UK,

Ireland, Canada, Australia and New Zealand, UltraViolet continues
to broaden internationally. UltraViolet has also expanded its
operations in France, Germany, with Benelux coming soon
thereafter.
Underpenetrated but growing

The eBooks market in India is expected to be around
~INR1.2 billion which is 1 per cent of the total book
market size, well below penetration rates in developed
markets. The market is expected to grow at 20-25 per
cent and this growth is expected to be fuelled by the
education sector (K-12 and above) with the majority of the
content in English. In contrast, the published book market
is dominated by the Hindi language.88
Strong Industry Support: Founded in 2008, UltraViolet was

designed and is operated by Digital Entertainment Content
Ecosystem (DECE) is the open consortium of leading global
companies, with more than 80 members (www.uvvu.com/partners.
php) are comprised of the largest Hollywood studios; leading video
retailers and network-based distributors; global device brands;
and top technology companies. DECE LLC has developed the
business, technical and legal architecture of UltaViolet, and also
owns the related branding. DECE provides its all partner licensees,
the centralized account system, rights library, and authentication
services to operate UltraViolet. UltraViolet has now attracted over
13 million accounts. With more retailers recently coming on board,
UltraViolets growth is expanding rapidly. For more information on
UltraViolet / DECE, please visit http://www.uvvu.com.
In terms of consumption, it is expected that bulk of digital

book content in the future would be consumed through
smartphones and tablets. However, this hasnt deterred
eBook reader manufactures with Amazon debuting its
Kindle in 2012 and Kobo launching their devices in 2013.
Ebook are consistently discounted by Amazon and Flipkart
when compared to the paper-back version. The discount
levels remain similar for the large part to 2012 levels of 15
to 30 per cent. 89
Ravindra Velhal. The views and opinions expressed herein are those of the authors and do not
Price comparison (including currently prevailing offers)

Segment
Publication
Amazon Book
Amazon EBook
Discount (%)
Flipkart Book
Flipkart EBook
Discount (%)
Fiction
The Oath of the Vayuputras
192
148.50
23%
203
56
72%
Biography
I am Malala
227
216
5%
227
193
15%
Business and investing
David and Goliath
385
327
15%
385
327
15%
Source: Prices on Amazon.in and Flipkart.com as of 7 Feb 2014

88. Global ebook Report (Fall 2013)
Outlook 2014
Social media as a shoppers platform
Major digital transformations in the consumer products
and retails industries, help ensure that shopping in
this digital age is a far more exciting experience, than
ever before. These changes have helped create a new
species of digital buyers characterized by their varied
use of multiple channels (websites, social networking
platforms etc.) and devices (Personal Computers,
mobiles and tablets). With social networks providing
marketplace platform(s) and with social media ad spends
maintaining the growth trajectory in the coming years
(faster than any other form of advertising), there is little

doubt that social media would translate into a valuable
shoppers platform. The present day customer likes being
connected and expects the seller to be connected as
well. Customers increasingly want to be able to shop
online, have QR codes for easy access on smartphones
and avail discounts on social media platforms. Retailers
are working around the clock to enable fulfilling shopping
experiences by catering to the increasingly mobile and
social consumer.
Twitter is the live social soundtrack for TV. In India and around the world, viewers are tuning into TV and Twitter
simultaneously for a live, public, real-time second-screen experience, bringing them closer to the characters, stars
and personalities of TV. We are delighted that Indian broadcasters are increasingly optimizing their TV programming
and their voice on Twitter to drive real-time viewership, engagement and value. If Twitter is the worlds town square,
its also the worlds biggest living room where we, together, as viewers, stars, and brands, enjoy the social, shared
experience that TV has always been.
- Rishi Jaitly
India Market Director,
Twitter
Urban India would reach 91 million social media users in 2013
27%
Young men
9%
Working Women
29%
College going
students
Source: IAMAI, Frost and Sullivan, KPMG in India analysis
50%>>
Spend more than 2 hrs per day on Social Media
67%>>
Refer social media before buying online
17%>>
Purchase influenced by social media ads and

promotiond
60%>>
Shop online once a month
13% Older men
11%
Non working men
20% Women
11%
School going kids
128
129
As customers traverse through the digital, vast

amount of data is being generated. Granularity
segmentation to generate insights at the speed
of the business will hold the ultimate key to
success for digital businesses. Advanced
analytics will help in demystifying these real
time strategies to predict consumer purchase
decisions.
- Kedar Gavane
Director at comScore,
Inc.
Marketing goes local: growing reach of location-based

targeting
The combination of Social (So), Location (Lo) and Mobile
(Mo) (SoLoMo) marketing tactics, also known as Location
Based Marketing (LBM), are frequently put to use by
businesses today. This is enabled through mobile phone
apps that use social networking and location data. The
companies with tangible products or services, such as,
restaurants or bookstores can look to benefit from this. A
number of retail, food and beverage and travel companies
are using LBM to deliver mobile ads directly to individual
potential customers within close proximity of the Pointof-Sale (POS) location. Globally, the revenue potential for
LBM is expected to grow by 150 per cent and is set to
double the CTR from the existing average of 0.4 per cent
by 2020. 90
The increasing reach of the Internet, new age marketing
tactics along with the maturity in the consumer needs
have paved the way for new, enhanced privacy and
governance policies that can strike the right balance
between easy access and robust security. The
uninformed sometimes raise concerns around LBM being
intrusive and that it tends to invade the privacy of the
consumers if they receive unsolicited ad notifications. On
the contrary, LBM works only if the customers opt-in for
such notifications.
.
90. Market research reports Mobile location based marketing solutions market forecast 2013-2018,
13 Nov 2013
Location based mobile delivery
P R Satheesh
Principal,
TELiBrahma Technologies
In what started as a journey in quest of success in the mobile
space, way back even before IPL was born in 2008, TELiBrahmas
mobile solutions forayed into the location space using Bluetooth as
a means and mode to deliver rich media content when GPRS was
either not available and even if it was - it was way too expensive
with not a very reliable connectivity. And the icing was when buzz
delivered rich media content for brands during the 1st edition of IPL
at cricket stadiums. Location based marketing (LBM) had well and
truly arrived way before check-ins had even remotely been thought
of or the population of Facebook was probably a tenth of what it is
in India, today.
Cut to circa 2007, the first location was a mall in Bangalore,
followed by Darshinis (fast food restaurants of Bangalore), temples
to deliver wall paper of INDIAN GODs and ringtones of religious
songs. Today the device can understand your location and deliver
the right content. To know the context and the location of the
consumer using mobile has been the advancement in the last few
years from a solution perspective, leveraging technology.
So, if a consumer walks into an airport, the WiFi/Bluetooth
infrastructure obviously knows this consumers location, device and
so on, cut to a retail store in a high street, same story or at a coffee
shop/hangout zone using buzz. To deliver a communication at the
last mile for a Brand is the most ideal thing, as the human mind is
most receptive to a BUY when closest to a store. One cant think
of a more personal and interactive way of communicating and
driving footfalls when the consumer is closest to a store.
Location need not be physical, for instance, if one can scan the
advertisement in a newspaper/magazine/TV using a recognition
app like pointart/pointtv, one gets to know what was scanned in
the newspaper/periodical or in a TV program/spot. Data through
this has immense value - be it at physical locations or from the
comforts of ones home, information of consumers interest can be
used by brands, media owners, research organizations and more.
The growth has come in the last few years from increased use of
internet on mobile and the stupendous growth of better phones,
platforms, ability to conduct business using hand held devices. This
trend will continue and can only get better.
The future lies in Who understands the consumer better and more
intimately on a one-on-one basis. If brands are able to deliver
deeper into media dark zones or in a heavily fragmented media
scenario and into the most personal device - it is possible only
through mobile. If we want to track the consumer while at home
from what he/she is reading/viewing and up to the last mile, it
is classic LBM and therein lies the future of Brands, media and
technology.
Unless otherwise noted, all information included in this column/ article was provided by P
R Satheesh. The views and opinions expressed herein are those of the authors and do not
Rural India logs into the internet

The number of computer literates in rural India rose nearly
two-fold by June 2013 reaching 125 million as against 185
million urban literates.91 By the end of 2013, there were
approximately 72 million rural Indians who had accessed
internet at least once in their lives and 49 million were
active internet users. 91 It is estimated that by June 2014,
the active user base in rural India would cross 56 million.91
Rural internet users split by PC and mobile, India

(in millions)
55
53
50
45
45
40
35
32
30
centage of mobile internet users, but rural India is not far

behind. Rural mobile internet user base is expected to
record a 52 per cent growth by June 2014.91
Rural and smaller town internet users are not shying away
from online shopping. Leading eCommerce businesses
in India claim to have delivered 50 per cent of their sales
volumes in non-metro cities. Sales from tier II and III cities
are fast catching up with sales from the metros and tier I
cities.
Nearly half of the internet users prefer to access content
in their local languages only. Limited availability of local
language content is one of the primary reasons that is
holding back rural users who want to keep up with their
urban counterparts.
Businesses especially online retailers have begun to take
notice and are taking actions to bridge the gap and tap
large number of online rural Indians. Snapdeal for example
recently announced the shift to multi-lingual platform.
Customers can now access the site in Hindi or Tamil,
apart from English. Kannada, Telegu, Bengali and Marathi
options are likely to be introduced soon. 92
27
25
Advanced ad technologies could gain

momentum
41609
PC Desktop
Mobile users
Source: IAMAI - IMRB Internet in India report 2013
While wireline broadband and 3G coverage is restricted to

metros and big towns as yet, EDGE-based (2G) networks
are used to access data in rural areas and smaller towns.
Urban India continues to account for the larger per
91. IAMAI - IMRB Internet in India report 2013
92. Press release, Economic Times 30 Jan 2014
With the increased adoption of Ad exchanges, new Ad

technologies such as real time bidding (RTB) is expected
to see greater traction in 2014. These technology
platforms could enable advertisers to deliver ads to
relevant audiences using various advanced targeting
parameters. In this controlled environment using third
party data, advertisers can improve their ad performance
and reduce the leakage rates more effectively and
efficiently.
130
131
Programmatic buying is set to take center stage

aggregators have made most of their inventory available to RTB
channels leading to an exponential increase in advertising spends
through programmatic.
Ashwin Puri
Vice President,
Remarketing & Mobile, Komli Media
Digital media is going through a shift where we are seeing the
scale and complexity of media buying increase by the day. As
marketers get savvier, they are expecting better targeting & reach
resulting in a higher ROI for every dollar they spend on digital and
so far the medium has kept pace with the expectations. Numerous
ad networks, exchanges and data aggregators have emerged in
the last few years, each adding its own share of innovation to
the ecosystem. One such innovation that disrupted the digital
advertising industry was the shift in buying and selling of digital
advertising through programmatic channels (i.e., the media trades
via an API). Real Time bidding (RTB) has enabled a new era in
digital as marketers for the first time had the opportunity to value
each impression and each consumer uniquely and bid for each
impression in a real-time scenario.
Ad tech companies saw the efficiency and performance
programmatic buying could deliver and were quick to respond to
this opportunity. RTB (Real Time Bidding) has given all entities (ad
networks, publishers, exchanges, DSPs etc.) a common ground to
value impressions which has led to significant transparency and
efficiency in the system. Advertisers now have access to more
inventory and publishers benefit by getting ads from marketers
they earlier didnt have access to, a win-win situation for both. In
the early days RTB was used by publishers to sell un-sold or lower
quality inventory but with the improved efficiencies & increased
demand sources that come into play with RTB, we see publishers
opening up higher quality premium inventory on programmatic
channels. In the past year, an increasing number of publishers and
Although programmatic buying suggests minimal human

intervention, algorithms can do only so much. Human optimization
is required at multiple stages to maximize the campaign
performance. Programmatic buying is also directly dependent on
the quality and depth of consumer data that marketers have access
to within the RTB eco-system. A marketer needs to have enough
information about the end users to bid for an ad impression to be
shown to the user at the right price and ensure that performance
goals are met.
We increasingly believe that the next wave of innovation will
come from specialized platforms that leverage the power of
programmatic buying for a specific use case/type of campaign
objective. The entire bidding algorithm, campaign workflows,
user data management & segmentation will be customized to
focus on a specific use case and do it really well. We at Komli have
already created a Remarketing DSP that leverages the power of
programmatic buying for remarketing campaigns. This is working
really well across the eco system as on one side marketers are
now able to get to as many as users as they would like to through
extended reach from RTB and on the other side, the publishers
benefit from the higher CPMs that marketers are willing to pay for
a specific user. This approach could very well be extended to brand
advertising or behavioral advertising and we are eager to see how
the industry innovates in the realm of such specialized solutions.
With more and more innovation coming into this space every day,
programmatic buying is set to see solid growth in the coming years
across geographies.
Unless otherwise noted, all information included in this column/ article was provided by Ashwin
Puri. The views and opinions expressed herein are those of the authors and do not necessarily
Conclusion
Navigating through the hyper connected
world
Digitisation of media products and services is associated
with the increase of Internet usage by customers and
businesses alike. Digital convergence has heralded
the age of customer experience and now experience
plays the role of differentiator. Buyer-seller exchanges
moving from passive transactions to active and
interactive relationships. The opportunity to access and
consume media services anywhere, anytime and on any
connected device has led to hyper convergence. Hyper
convergence tries to seamlessly integrate various media
forms, content, commerce and social networks. It has
helped draw virtual aspects of infrastructure together with
the physical.
With the increase in mobile device adoption and usage
rates, customers seek highly personalised and compelling
responses to their needs. Consumer devices and
technologies have turned into an important enabler to
help meet fast-growing customer expectations, especially
connecting with the always-on and connected customer.
Multi-screen interaction has provided an opportunity for
innovation for companies to engage customers across the
marketing, sales and service touch points.
The phenomenal growth of digital touch points including
mobile and social networks indicates a strong need for
consumers to connect and converse with the product or
service provider. The need of the hour is personalization,
with the focus shifting towards establishing long term
relationships and tailor made solutions based on real

time consumer needs. For instance, organisations
that recognise the enormous opportunities in Indias
hinterlands are concentrating on vernacular content for
personalisation and creating a brand experience that is
focused on localising the brand. The digital revolution
has altered the balance of power between the customer
and the business. Customer expectations have risen
considerably; they spend more of their time online
and want businesses to reach out to them at their
convenience through multiple touch points.
Digital transformation is gaining ground in India and the
web is increasingly establishing itself as a mass market
medium for products and services. In the year gone by,
digital and social media revolution has been embraced
by people across all strata of society. Politicians have
made new media as an integral part of their campaign
strategies. Businesses turned to result-oriented options
including geo-targeting and location-based services and
data targeting was rich, layered and highly nuanced.
Looking ahead, India can expect to see a host of new
technology innovations and advancements in marketing
techniques with the key drivers of this growth being
the need for better connectivity, device. In a short span
of time, digital media in India has come a long way
from being an information provider to an engagement
enhancer.
Consumer expectations have undergone dramatic shifts and are constantly changing. Today, users expect a seamless,
engaging experience across products, platforms and screens. Brands have also evolved in their understanding of
online audiences and are upping their game with new possibilities through digital. Personalization, cross-screen
experiences and rich immersive content are increasingly gaining ground.
- Nitin Mathur
Senior Director Marketing,
APAC at Yahoo!
132
06
Radio
At a new frequency!
Round up of the year gone by
Industry landscape
2013 was a mixed bag - challenging and rewarding at the

same time. A sluggish economy and stringent market
conditions compelled companies to look at internal
efficiencies to squeeze out growth.The radio industry still
outperformed the growth of all other traditional media
segments, and this, without Phase-III which remained
elusive, in spite of several assurances by the government
that the licensing was imminent.The industrys growth
could be attributed to two major reasons. Firstly,
advertising budgets were under pressure and clients
were forced to re-evaluate their media mix.Secondly,
there is a tendency to shift focus from nationwide pure
brand-building to more tactical, local, focused promotional
targeting. Both these factors played in Radios favour.
Radios combination of high reach and affordable pricing
makes it an attractive advertising medium.
Indias commercial radio industry has only emerged in the

last 15 years with two phases of FM licencing (in the late
1990s and 2006/07).
In Phase I of its development, FM was made available to
private broadcast channels in Chennai, followed by Delhi,
Mumbai, Kolkata, Goa, and then Bengaluru, Hyderabad,
Jaipur and Lucknow. 21 licenses were awarded to eight
radio companies across 12 cities with the key objective to
attract private companies to invest in FM radio in India.3
During Phase II of its development, 338 frequencies
were offered, of which about 245 were sold to 38 radio
companies across 86 cities. The key objective was to
spread FM radio to larger number of Indian cities and
towns with local players.3
Phasewise details of FM radio license and cities

A weak economy and the resultant slowdown
in advertising revenue growth did not impact
Radio as much as other media. The 12 minute ad
cap in TV also resulted in advertising revenues
moving from Television to Radio. As a result,
Radio advertising growth has been better than
the overall media advertising growth.
CFO,
Reliance Broadcast
The overall revenues of listed radio players exhibited

double-digit growth rate over the previous year,
approximately 12-14 per cent.1 This growth was driven
equally by volume enhancements in Tier II and Tier
III cities and increase in ad effective rates (ER). The
industry managed to keep the Compounded Annual
Growth Rate (CAGR) steady in 2013 with smaller
players turning profitable during the year as their
networks matured. Categories like Real Estate, FMCG,
Government, Retail and M&E increased their spend on
radio.2 Also, one witnessed a change of attitude towards
radio - FM radio is no longer seen as an add-on medium;
today, it is an integral part of a media plan and sometimes,
campaigns are planned around it. The innovations in
radio advertising along with growth of the industry and
the positive vibe surrounding it have made sure that
advertisers can no longer afford to take the industry
lightly.
Source: Ministry of Information and Broadcasting (MIB) www.mib.nic.in - Recommendations on

Phase III of Private FM Radio Broadcasting 22nd February 2008
The industrys foundation was weakened by a licensing

process (ascending non electronic auctions) which
encouraged overbidding and an annual fee structure
(fixed upfront fee) which ultimately proved to be a strain
on the finances of radio companies. Whilst these issues
were resolved by the time the second phase of licensing
was being implemented (single step closed bid tenders
were invited and license fee was based on an entry fee
plus four percent share of gross revenues every year),3
the industry has struggled with building sustainable
profitability primarily due to heavy investment in brand
building and a tight regulatory regime which has restricted
the industrys ability to reduce costs through networking
content and ownership of multiple licenses in each city.
The private FM radio industry comprises network players
(national, regional and metro-focused), single stations and
some niche players. A broad categorisation of FM radio
companies is provided below.
01. KPMG in India industry discussion and analysis

03. Ministry of Information and Broadcasting www.mib.nic.in
134
135
Broad structure of Indian radio industry4
Note: Figures in bracket denotes number of licenses held by radio companies.
Prasar Bharti operates All India Radio (AIR), Indias public

sector radio service. AIRs home service comprises 406
stations across the country, reaching nearly 92 percent
of the countrys area and 99.19 percent of the total
population. AIR originates programming in 23 languages
and 146 dialects.5
Historical growth in industry revenues

Size of radio industry
Amount in INR billion
At present, AIR operates 18 FM stereo channels, called

AIR FM Rainbow, targeting the urban audiences. Four
more FM channels called, AIR FM Gold, broadcast
composite news and entertainment programmes from
Delhi, Kolkata, Chennai and Mumbai. With FM popular
across the country, AIR is augmenting its Medium Wave
transmission with additional FM transmitters at Regional
stations.5
Source: KPMG in India discussion and analysis
Revenue growth in FM radio is expected to be driven by6:

Launch of stations and increase in their popularity
across more Tier II and Tier III cities, which enables

radio companies to provide advertisers with a bouquet
of channels that can support brand launches across
states or regions as a substitute for print or regional TV
Growth in advertising ER on radio

04. Ministry of Information and Broadcasting www.mib.nic.in
05. www.allindiaradio.gov.in
06. KPMG in India interviews and discussion
136
Expected regulatory reforms that are likely to improve
profitability and stimulate foreign investment
Implementation of an accurate nationwide
measurement mechanism including allowing multiple

station ownership in a single city and content
networking will increase returns across FM stations.
Listenership trends7
Time spent on radio

Time spent on radio
(Average Weekly
Minutes)
Major metros
Weekday
Saturday
Average weekly time

on radio
Sunday
2013
2012
2013
2012
2013
2012
2013
2012
Delhi
642
585
147
133
143
136
932
854
Mumbai
574
628
128
140
128
144
830
912
Bengaluru
890
854
189
183
194
188
1,273
1,225
Kolkata
678
739
162
172
166
172
1,006
1,083
Source: RAM data for the year January 2013 to December 2013. Copyright reserved with TAM MEDIA RESEARCH PVT.LTD. Any use of RAM Data or (derivative thereof) mentioned herein without express
permission of TAM shall be treated as illegal.
In 2013, there was no significant change in the time spent

on radio per week in the four metros. While time spent
on radio increased in Delhi and Bengaluru, there was a
decline in Mumbai and Kolkata. Bengaluru and Kolkata
continued to have higher time spend as compared to the
other two metros. Radio listeners in Bengaluru spent
about 21 hours a week, while in Delhi and Mumbai, radio
listeners spent approximately 14-16 hours a week. The
average time spent on radio by listeners continued to be
higher over the weekends.7
Audience profile7
In 2013, men and women spent almost equal amount of
time listening to radio in the four metros taken together;
however, Mumbai had the higher share of women
listeners at 56 per cent while Delhi had the highest
share of male listeners at 58 per cent. Also, 2013 saw a
marginally higher percentage of listeners over 35 years of
age, especially in Mumbai and Kolkata.7
Audience profile
Source: RAM data for the year January 2013 to December 2013. Copyright reserved with TAM MEDIA RESEARCH PVT.LTD. Any use of RAM Data or (derivative thereof) mentioned herein without express
permission of TAM shall be treated as illegal.
07. RAM data for the year January 2013 to December 2013. Copyright reserved with TAM MEDIA RESEARCH PVT.LTD. Any use of RAM Data or (derivative thereof) mentioned herein without express permission
of TAM shall be treated as illegal.
According to analysis by Radio Audience Measurement

(RAM) which covers four metros Mumbai, Delhi,
Bengaluru and Kolkata, in 2013, the share of audiences
tuning on to radio from out-of-home mediums such as
cars, etc. as compared to in-home listing increased from
21.3 per cent in 2012 to 23.1 per cent in 2013. It was the
highest in Delhi (31 per cent), followed by Mumbai (25 per
cent), Bengaluru (24 per cent) and Kolkata (12 per cent).
137
Some key trends

Social awareness on Radio: Its not all
about money
In the recent past, Radio stations have been undertaking
many different social initiatives to educate the public
and increase awareness by playing Public Service
Announcements, celebrating special days like World
AIDS day, interviewing personalities on related issues,
and holding contests. The general perception is that
the private FM industry is entirely commercial but the
industry also plays a part in community building and social
awareness. Public service announcements on
health, environment, safety measurement, education,

gender issues, etc. are now a regular feature of
broadcasts. Live traffic, rules and updates of traffic in the
city, farming tips, health tips, weather reports, cooking
tips and exam counseling are now increasingly featured
on several stations.
Insight into social awareness programs carried out on Radio in recent times
Program
Radio station
Content of the show
Green Durga initiative9
Big FM and Big

Magic
Green initiative in the Bihar and Jharkhand region with The BIG Green Durga aimed to
propagate a sense of responsibility amongst the local populace by encouraging them to
celebrate Durga Pooja the Green way!
Pinkathon Run to
Lead8
Big FM
10km run for women in Bengaluru with an aim to spread awareness on breast cancer.
Mirchi for
Muzaffarnagar9
Radio Mirchi
Launched in association with NGO Goonj, the campaign aimed at urging Delhiites to come
forward and contribute their winter clothes and blankets for the riot affected people in
Muzaffarnagar.
Campaign to educate
auto drivers9
Radio Mirchi with

Muthoot Finance
This campaign was carried out to encourage auto drivers in Coimbatore to consciously drive
safely and responsibly.
Dont drink and drive

Campaign8
Radio City with

SABMiller India
All day during Diwali, listeners could through calls or social media take an on-air pledge
not to drink and drive and participate in activities like Pledge Mobile.
Munni Vardaan Hui8
Red FM
A campaign against Female foeticide on Womens day in all the major cities of the east
such as Bhubaneshwar, Silliguri, Guwhati and Jamshedpur.
Deep Jyoti campaign10
Radio City with

Sunkalp Energy
The mission of lighting up an unelectrified village in U.P, Samranpur was taken up by Radio
City.
Pani Bachao, Life

Banao8
Big FM
The three month campaign engaged listeners across 30 stations of Big FM network with
partnerships and associations with local NGOs, governing bodies and celebrities. The
campaign had multiple on-ground and on-air elements which encouraged listeners to
conserve water during the course, highlighted the gravity of the issue, combined with tips
on water conservation which varied from rainwater harvesting to simple tips on saving
water
Green Ganesha8
Big FM
Green Ganesha Campaign completed its sixth successful year of nurturing an improved
environment while celebrating Ganesh Chaturti, one of Indias most popular festivals.
Radio goes beyond music: Programming

with a difference
In the absence of multiple genres of music or talk
radio, Radio stations are learning to innovate to try and
differentiate their station. A number of stations have taken
the initiative of going beyond music and RJ programming
to create differentiation and strengthen their brands.
08. www.radioandmusic.com
09. www.medianewsline.com
10. http://social.yourstory.com
A few examples of non-music content on Radio

Program
Radio
station
Content of the show
Yaadon ka Idiot Box11
Big FM
A relatively new show, Neelesh Misras primetime show on which Neelesh tells stories every day
from the imaginary city of Yaad Sheher, is highly awarded radio show, having most recently been
honored for the most unique programming content at the Golden Mikes Awards. The Facebook page
of the show, titled Yaad Sheher with Neelesh Misra, gets approximately 5 million page views every
month with the content being heard online in 20 countries. Also, the show is the first example of
radio content being developed into a series of books in India.
Kya Woh Sach Tha12
Fever FM
A 20-episode horror series, this 15-minute ad free show inspired by several real life stories was
aired with a new story for every episode. The show revolves around a fictional character, Dr Nagar, a
parapsychologist who narrates experiences from his daily life.
Friends in a Metro13
Fever FM
Friends in a Metro is a series based on the lives of five individuals from distinct walks of life,
brought together by circumstances which lead them to develop a wonderful bond of friendship.
These are just few examples; smaller stations like Radio

Choklate and Tomato FM have been airing radio plays
and other non-Bollywood, non- music contents. Besides
playing Oriya music, Radio Choklate also airs opera or
plays called Choklate Rangamancha.14
Another interesting face of the Indian radio story is the

mobile phone explosion and its convergence with FM;
today, 80-90 per cent of mobile users access the radio on
their phones.14 This has exponentially increased the width
and depth of the market.
While the majority of the content played by most radio

stations includes music, non-music content is increasingly
finding a niche. With increasing competition in the market,
many radio players are creating innovative contents and
programming to cater to the audience at large. When
FM Phase III is rolled out, this trend is expected to gather
strength as the number of stations multiply and the need
for programming differentiation accentuates.
Radio-based advertising can thus be used effectively for

communication and positioning.
Radio Advertising: More than a recall

medium...
The radio advertising industry has shown noticeable
growth in 2013 in absolute terms, although the share of
radio to the total advertisement pie remained constant
at approximately 4 per cent to 4.5 per cent.15 Industry
experts are saying that the trend is expected to continue
till the introduction of Phase III of licenses. Among
categories that generally advertise on radio are Real
Estate, Retail, FMCG, M&E and Government.
With carefully worded scripts, brilliantly created
situations, and tailor-made strategies, radio advertising
is getting more innovative and effective. Studies indicate
that instead of two back-to-back commercials on
television, one commercial on television and another one
on radio gives about a 20 per cent15 higher brand recall.
Campaign recall increases many fold, when

radio is used in a right mix with Print and TV.
- Harrish Batia
DB Corp (Radio Division)
While Radio does have the disadvantage of not being a

visual medium, effective usage of Radio through a good
creative can help overcome that disadvantage. The key
is for the industry to educate the advertisers, not only
about the effectiveness of the medium in delivering better
Return on Investment (ROI) for their brands, but also
about the quality of its listenership profile.
Path ahead
Innovation and engagement
Since Radio spots, RJ mentions and promo contests
are the norm today, innovation that will help break the
clutter to get the desired response is the need of the
hour. Industry conversations highlight that the radio
industry will continue to position itself as an engagement
medium - regular mentions by RJs who have emerged
as celebrities in their own right, dial-in shows as an
engagement tool, and as local advertisers continue to get
educated on the effectiveness of radio as a medium the
share of local will also continue to climb.
Consolidation of advertisement avenue by Radio
To increase the overall impact of Radio advertising, Radio
has to have linkages to other parts of the marketing
elements or touch points, such as directing listeners
to a website, Twitter handle, Facebook page or retail
touchpoint where consumers can buy or interact with
someone. A lot of Radio channels also offer on-ground
activation to complement on-air marketing initiatives
11.
12.
13.
14.
15.
www.dumkhum.com
www.afaqs.com
www.radioandmusic.com
www.mxmindia.com
KPMG in India industry interviews and discussion
138
139
because of which brands are increasingly viewing Radio

channels not just as an advertising medium, but as
partners in their respective campaigns and initiatives. The
digital age has also opened up more opportunities in this
space.
Localised and targeted marking
Radios advantages of mass localised reach and
communication, with a quick turnaround of campaigns
across multiple geographies, ability to integrate digital
and most importantly the ability of RJs who have a huge
standing amongst their audiences to anchor a campaign
is a significant differentiator for the medium. For sectors
such as real estate and retail, radio has emerged as the
go-to medium. This medium is extremely important when
it comes to reaching out to consumers in certain parts of
small town and rural India.
A lot more research
Industry experts believe radio gets sharper segmentation
and one can choose the period and timing. Therefore, a
lot more research is needed in terms of demographics to
ensure correct engagement with the right audience.
HEAR, HEAR!
Radio ads are not talked about as much as their Print and
Television counterparts, but some brand campaigns really
grabbed the listeners attention16:
Program
Content of the show
RANG DO YEH PAL
Objective: Getting new users or henna users to try the hair colour, Godrej Expert Rich Creme.
Concept: Key consumer insight was that people across the country like to look good during festive occasions as
they have maximum social interaction during this period; starting with Fathers Day, a list of major festivals was
prepared for each State.
Execution: The medium proved to be effective with various routes of communication, each catering to a
different task. Consumers were asked to call a toll-free number to register and avail of the free hair colouring
session; the RJ mentioned occasion-specific contest questions which ensured participation from consumers. The
captured consumer experience at the free hair-colouring activity was played back on the Radio, providing positive
testimonial for the brand. On fathers day RJs asked listeners to narrate experiences with their role model, their
father.
JOHNSONS BABY KARE

MAA JAISI DEKHBHAL
Objective: To reach out and engage with mothers in the rural areas of UP and Bihar. The challenge was How do
we engage with these women in media dark markets and establish connect with the Johnsons baby brand?
Concept: Consumer insights revealed that these women in Uttar Pradesh and Bihar had limited knowledge of
baby care and that they had tremendous faith in doctors recommendations.
Execution: Radiowani and AIR tied up to develop Johnsons Baby Care presents Karein Maa Jaise Dekhbhal a
15-minute programme was aired daily on primary channels of AIR in the afternoon slot. A character called Doctor
Didi would answer mothers queries about baby care and also give tips on baby care. To make the show more
interactive, mothers could send their queries through postcards or by IVR - call back (missed call). Johnsons
Baby product ads were also played in the breaks to establish the brands connect. It highlighted the special
care mothers need to take while they are pregnant. The programme also had a call-in segment where consumer
queries were answered by health care professionals. The format of the programme and the reach of the medium
allowed Johnsons Baby Care to drive equity in these geographies as an expert in child care that is recommended
by doctors.
16. http://www.impactonnet.com/How-can-radio-be-more-useful-to-advertisers
Program
Content of the show
BENADRYL BIG GOLDEN

VOICE HUNT
Objective: To create an entertainment based campaign related to the benefits and values of brand Benadryl
cough syrup.
Concept: Singer Abhijeet hosted a singing reality show on Radio via an interactive digital portal exclusively
created for the campaign. One winner was chosen among participants from 45 stations across India.
Execution: Benadryl tied up with BIG 92.7 FM to launch the Benadryl BIG Golden Voice Hunt, a Radio-based
singing competition. City-wise shortlisted candidates were pooled together in Mumbai for grooming cum
competition by Abhijeet. This format was a good fit for the brand as the underlying thought was to position
Benadryl as a cough expert and show that it understands the impact that a bout of cough can have on ones
voice, especially to the golden voice of a singer.
TATA I-SHAKTI DAL ON

CALL
Objective: Getting consumers to try TATA I-Shakti Unpolished Dal and ordering dal over phone, email or by
visiting their website.
Concept: Radio was used to tap working couples who prefer healthy products and housewives who listen to
radio while doing household chores. The campaign concept was to educate consumers about the benefits of
unpolished dal and prod them to try the product.
Execution: A high decibel radio spot campaign was followed by a shorter, crisper creative where the dal on call
number was promoted along with extensive RJ promotions incentivising the listeners who called the number to
place orders.
Prominent RJs, like RJ Malishka on Red FM was roped in to discuss the significance of consuming unpolished
dals which are nutritious and also taste great. To ensure engagement with consumers and encourage listeners
participation, a quiz contest was introduced on health-related subjects.
MAX i-GENIUS
CHHOTE GENIUSES
KI KAHANIYAN WITH
NEELESH MISRA
Objective: To create a buzz around the launch of Twist in the Tale, a book by Max i-genius Young Author Hunt
by involving Neelesh Misra as a part of the book launch plan.
Concept: A show Chhote geniuses ki kahaniyan with Neelesh Misra was created where 10 selected stories
written by i-genius young authors were presented in the voice of Neelesh Mishra.
Execution: The show was aired across six cities, twice over the week, for a period of five weeks, where
Neelesh Misra, an already established name, added longevity and recall factor to the property, thereby
promoting the book launch. Max Life had organized i-Genius Young Authors Hunt, a nationwide search for
young writers in India. Radio seemed the perfect medium that could be used as a platform to bring these great
stories to life and Max Life Insurance partnered with 92.7 BIG FM to create a unique show Chote Geniuses Ki
Kahaniyan with Neelesh Misra.
WOMEN MPOWERED
DAY - NEVER ALONE
WITH MTS
Objective: The Mobile Telecom category was male-oriented and no other telecom player had addressed
the Women. With increase in crimes against women, MTS India created the MTS Women Mpowered Plan with
a range of special initiatives aimed at empowering their women customers.
Concept: For 24 hours on Womens Day, the programming, advertisements, promotions and integrations
would be driven towards Womens Safety and the Never Alone with MTS idea. It gave MTS direct access to
unobtrusively bombard the listeners with the safety features of an MTS Mpowered Plan subscription.
Execution: Radio was the chosen medium as it allows real time interaction between brand and audience and
the concept was executed with Red FM 93.5 in Delhi using Shared Radio Spots. Here, Radio was the exclusive
medium used for about a week with a three-phase teaser revealer, launch and sustenance. The targeted direct
reach, interaction and innovation possible with the medium worked for the messaging.
140
141
Digital radio: Making new

waves!!!
Radio, till now, is considered as a medium

to disseminate traditional music and news
content.. With digitization, there is a huge
opportunity to provide Radio as a service RaaS
through various delivery platforms, both on-line
and off-line - domestically and in international
markets. This will help in promoting content
for Special Interest Groups, who have been
deprived of this medium till date...
In recent years, penetration of internet has increased

to 17 per cent.17 This coupled with growth of the
smartphone segment (mobile phones internet users
are approximately 130 million18) has blurred the lines
between traditional analogue broadcast media in the form
of television and radio and the Internet and new mobile
technologies, bringing them all under the broadcast
umbrella. As more consumers consume digital media and
more content owners use this medium, it is very crucial
for companies to access some untapped audiences as
this will not only add new listeners but also strengthen
the hold among existing consumers from being taken
away by new competitors. The traditional broadcast radio
channels are also exploring contemporary avenues of
Internet radio such as an online stream, podcasts and
platforms such as YouTube and Sound Cloud to expand
their reach and enhance consumer engagement.
- Anil Srivatsa
CEO, Co-Founder,
Radiowalla Network Pvt. Ltd
- Harry Bhatia
Co-Founder,
Radiowalla Network Pvt. Ltd
Some of the traditional FM players who have taken their

station online include:
Planet radiocity19
Radio Mirchi20
Big FM21
Radio City Fun Ka

Antenna
Meethi Mirchi
Big net humor radio
Radio City FREEDOM
Purani Jeans
Big net celebrity radio
Radio City INDIPOP
Club Mirchi
Big net spiritual radio
Radio City SMARAN
Mirchi Edge
Radio City
INTERNATIONAL
Radio Romance
Radio City LOVE
Cassette Classics:
Rewind, Replay
English Retro
Radio City HINDI
Mirchi Rockistan
Radio City TAMIL
Devraag
Radio City
MALAYALAM
Additionally, there are certain stations catering exclusively
to internet radio, for example Radiowalla.in has over 25
channels across genres, Radio Maska plays 247 Hindi
music catering to Indian and NRI listeners.
Digital radio uses various channels to reach its audience:
Podcasting
Podcasting is a convenient way of automatically
downloading audio or video files to your computer.
Though still at a nascent stage in India, the trend is fast
catching up.It is a cost effective and easy medium to
broadcast content among the wider audience and the
number is expected to go up with improvements in
internet bandwidth and deeper penetration.The Radio
industry is slowly waking up to the benefits of podcasting
and currently we see a large number of podcasts doing
the rounds on the popular portals and websites, as
podcasting surely helps in reaching out to an audience
that would otherwise have been lost.
For instance, Radio Mirchi podcasts regularly through
the iTunes platform, and is the only radio station which
features on the cover flow of iTunes Store.Radio Mirchi
is the number one audio podcast from India as per
iTunes reports.Radio city has five podcasts for each of
its 20 stations.These podcasts showcase the station
comprehensively, from snippets of shows to pre
produced features (PPFs) and ensures traffic of 15,000
plus in a month.22 AIR also offers podcasting but they
provide live services unlike private radio stations.AIR
offers three ways to subscribe to programs iTunes, My
Yahoo and RSS.
YouTube
Radio stations are also using other online media
platforms for ensuring a wider presence. Private FM radio
companies such as Radio Mirchi have established their
own YouTube channels to offer customized content for
audiences.Other players are also present on this platform.
17. IAMAI Mobile Internet in India, 2013

18. TRAI Performance indicator reports 2013
19. www.planetradiocity.com
20. www.radiomirchi.com
21. http://www.big927fm.com/bignetradio.php
22. www.radioandmusic.com
SoundCloud and Whatsapp

Big FM continues to use online media sharing platforms
like SoundCloud to expand its user base to overseas
listeners with a high demand for vernacular content. The
radio station has also recently started using the Whatsapp
application to engage with users.
The radio companies are trying to reach their audience
through DTH as well as mobile value added services
(mVAS).
Though Internet Radio is still at a nascent stage, it
is appealing to mushrooming audiences who want
dedicated channels for a specific genre and do not wish to
wait for some part of the day allocated to it by a
radio station or listen to mass consumption music. The

constraints faced by traditional radio players such as lack
of available spectrum and expensive license fees are
not faced by Internet radio and hence, it can air multiple
genres. Many traditional broadcasters see it as an
extension of their current offering. The market for Internet
radio is still small as compared to broadcast radio and
currently caters to only specific or niche audiences, but
listenership is increasing. The number of listeners has
increased to 120 million in 2013 from 23 million in 2003
i.e. a whopping 421 percent increase as compared to 8
percent23 for broadcast radio.
Increase in listernership of broadcast radio vs internet radio23

18 million new listners, 8% increase
300
250
200
97 million new listners, 421 % increase

150
100
50
Broadcast Radio
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Internet Radio
Some internet radio mobile applications

TuneIn: claims 50 million to 100 million installs and
has an average Google Play Store rating of 4.6 stars out

of a possible 5 from 304,933 reviewers.24
Pandora Internet Radio: claims 50 million to 100

million installs and has an average Google Play Store
rating of 4.5 stars out of a possible 5 from 1,030,968
reviewers.24
Stitcher Radio - News and Talk: claims 1 million
to 5 million installs and has an average Google Play

Store rating of 4.1 stars out of a possible 5 from 19,302
reviewers.24
23. Broadcast Radio data: Arbitron RADAR 2003-2013

24. www.teachnewsworld.com
Scanner Radio: claims 10 million to 50 million
installs and has an average Google Play Store rating of

4.4 stars out of a possible 5 from 85,481 reviewers.
Gordon Edwards Scanner Radio is for listening
to over 4,000 public safety, weather and amateur
radio frequencies from around the world, including
police and fire dispatch and incident-based tactical
communications.24
142
143
iHeartRadio: claims 10 million to 50 million installs
Radiowalla.in: is a radio app with multiple audio

channels of music, sports and celebrity talk shows
across all genres.
and has an average Google Play Store rating of 4.4

stars out of a possible 5 from 160,561 reviewers.25
Radio India: is an India specific Internet radio app

for Windows 8 from K9 Apps which features many of
the popular Indian radio channels. The app has radio
stations in 10 leading Indian languages (Hindi, Marathi,
Gujarati, Kannada, Punjabi, Bengali, Assamese,
Malayalam, Telugu, and Tamil). Total number of radio
stations available on the app is 200 and the developers
say that the number is growing fast. While the private
radio stations are available live, users can hear the
recorded programs of All India Radio in different
languages.
As at 15 February 2014, out of 163 total operational CRs,

94 are education related, 58 are NGOs and balance 11
CRs are dedicated to agriculture development and related
education.27
Types of community radio27
35%
Non profit
organisation
58%
Education
related CR
7%
CR for agriculture
development and
related education
Community radio: A voice for

and of the people
Community radio (CR) is a radio service offering a third
model of radio broadcasting in addition to commercial
and public broadcasting. Community stations serve
geographic communities and communities of interest.
They broadcast content that is popular and relevant to
a local, specific audience but is often overlooked by
commercial or mass-media broadcasters. They are
generally nonprofit and provide a mechanism for enabling
individuals, groups, and communities to tell their own
stories, to share experiences and, in a media-rich world, to
become creators and contributors of media.
In India the campaign to legitimise community radio
began in the mid-1990s, soon after the Supreme Court of
India ruled in its judgment of February 1995 that airwaves
are public property. Until late 2006, only educational
institutions were allowed to set up campus radio stations
having a transmission range of 10-15 km; however, the
scope was expanded with the implementation of new
Community Radio Guidelines on 16 November 200626
which also included non-profit agencies, agricultural
research institutes, and schools, to set up community
radio stations that would involve local communities in the
content production process.
Number of operational community radio stations27

161
126
2012
Number of operational community radio
As at 1 December 2013, the Ministry of Information and

Broadcasting announced that 1,277 applications for CR
licenses had been received, 438 Letters of Intent (LOI)
were issued, Grant of Permission Agreements (GOPA)
were signed with 194 applicants, and 161 community
radio stations were on the air. 616 applications were
rejected, and 223 applications were being processed.27
Application status at various dates27

1,400
1,200
1,000
800
600
400
200
as at 1 July 2010
as at 1 February
2012
Application received
CR station on air
LOI issued
Rejections
as at 1
December 2013
GOPA signed
Under process
As is evident from above, there is a rise in the number

of application for CR licenses. However, there are strict
rules and stringent pre-requite conditions which have
resulted in an increase in the number of rejections.
110
2011
Status of CR licenses as at 1 December 2013
2013
25. www.teachnewsworld.com
26. ISSN (Online):2347-1697 INTERNATIONAL
JOURNAL OF INFORMATIVE AND
FUTURISTIC RESEARCH ( IJIFR) Volume -1
Issue -4, December 2013 Research Area:
Mass communication & Community Radio,

Page No.: 97-100
27. Ministry of Information and Broadcasting
www.mib.nic.in
Case study on community radio28

Sangham Radio 90.4 MHZ
Launch Date: 15-10-2008, Broadcast Timings: 19:00 - 21:00, Broadcast
Hours: 02 Hours, Languages: Telugu, Programme Bank: 513 Hours
Vision and Mission
Sangham, referring to village level womens collectives, is the
cornerstone of the work of the Deccan Development Society (DDS).
Every activity is designed, planned and implemented by these
collectives.
Genesis
The DDS community media initiative commenced around 1997 and was
founded on the principle that media has always treated rural people
and also women from the marginalised sections as consumers, not its
producers. A media of the people, for the people, by the people is the
only way to respond to their marginalisation.
Thematic Focus
Women and biodiversity, women and ecological agriculture, women
and land ownership, seed sovereignty and women, food sovereignty
and women, ecological enterprises of rural women, healthcare and
plant medicines, herbal care for animal diseases, making childrens
education relevant to rural milieu, violence against women and legal
education for women.
Signature Programmes
Our farming, Our crops; Our language and its unique nuances; Our folk
culture; Dialogue of in-laws; Our food, Our cuisine; Balanndam a
childrens programme etc.
Community Participation
As many as 2,500 women are involved in contributing to the
programmes of Sangham Radio. At least ten women come daily from
different villages to discuss, debate, sing, tell stories, take part in plays
and to participate in recordings etc. Sangham Radio considers its
own community of women and the non-literate as the best teacherslearners. Therefore they occupy this broadcast platform. Sangham
Radio has four young women as producers and 14 local men and
women as reporters.
Innovations in Format
It is a community media programme in which grassroot communities
work together to discuss their issues and use their technical
capabilities to tell their stories in their own voices and language.
Partnerships and Funding
Infrastructure development and procurement of technical items was
supported by UNESCO. Every Sangham member of the DDS villages
contributes INR50 a year towards the running of the Community
Radio Station. Besides this, the project is also supported by DDS for
promoting organic farming practices, seed conservation practices,
traditional healthcare, women empowerment and education etc. The
station also gets revenue through advertisements from the DAVP as
well.
Lessons Learnt and Impact
After listening to the radio programmes, people are coming forward
voluntarily to share their experiences in organic farming and millet
promotion activities.
Peoples Voice
This channel speaks about herbal medicines and sharing with other
people what is learnt from the radio channel.
Conclusion
In the real sense, community radio plays an essential
role in making the masses aware about their basic rights
and duties. Not only limited to solving problems which
a common man faces in his day-to-day life, community
radio provides him a strong platform from where he
can freely disseminate his ideas among his community
members in the best possible manner. Thus, community
radio becomes one of the important instruments in
strengthening our Right to Freedom of Speech and
Expression. Besides solving social problems as well as
entertaining local people, community radio also acts as
an intermediary between the Government and the local
masses.
28. Ministry of Information and Broadcasting www.mib.nic.in Community radio: Compendium 2013
144
145
Key risks, issues, challenges

facing the radio industry
Macroeconomic risk
The performance of the advertising industry is directly
proportionate to the fortunes of the economy. As an
economy slows down, advertisers cut spends as a means
of managing their profits. While the overall outlook of the
Indian economy is turning positive, growth is expected to
be slower than in the recent past. The combined impact
of moderating growth, high inflation and monetary
tightening can adversely impact advertising budgets
of companies, which forms the largest component of
revenue for the radio companies.
Delay in phase III
The radio industry has grown and surpassed the

analyst estimates (in 2013), but the frustration
of another year passing without Phase 3 (policy
and auctions) has dampened the overall
sentiment.
-Rahul Gupta
Director and Project head,
Jagran Radio
Delay in the roll-out of policy for the third phase of the
licensing of 839 FM stations, cleared by the Cabinet in
July 2011, has stymied the growth for the INR14 billion
radio industry which needs to expand, fast. India today
has only 245 FM stations across 86 cities, in addition to
the All India Radio network, out of the 1600 odd number
of cities in India. Per industry sources, only a few of the
30-odd operators are profitable at a post-tax level. After
more than 12 years of privatisation, radio remains one of
the smallest segments of the INR920 billion30 media and
entertainment industry.
It is believed that the policy is going back and forth over
a few key issues. One is the auction itself. For phaseIII, the Cabinet has recommended an open, ascending,
e-auction. The open, ascending approach could lead to
overbidding, unsustainable licence costs and impossible
breakeven numbers, just as in the case of phase-I. In an
open, ascending auction, the reserve price is fixed. This
is the highest bid for a town in a similar category in the
same region. So, for example, the phase- II bid of INR156
million for Chandigarh becomes the reserve price for
small towns like Shahjahanpur31, though the potential for
ad revenues is not similar. It may be pertinent to note that
more than 90 per cent29 of the licenses to be auctioned in
this round are in Tier-II and -III towns, such as Bhavnagar,
Dehradun, Kargil and Ujjain.
29.
30.
31.
32.
www.business-standard.com
Telecom Regulatory Authority of India site
Telecom Regulatory Authority of India site: www.trai.gov.in/Content/ReDis/522_2.aspx
The second issue is frequency allocation. One of the

things holding back the government was the scarcity of
spectrum, large parts of which are with All India Radio or
the defence services. A solution, according to industry
players, could be to reduce the minimum gap between
frequencies of two radio channels.29
Update on FM radio phase III32

On 3 December 2013, TRAI issued a Consultation
Paper (CP) on Migration of FM Radio Broadcasters
from Phase-II to Phase-III wherein written comments
and counter comments on the CP were invited from
stakeholders. Based on written submissions of
the stakeholders, the Open House discussion and
international practices, the Authority finalised its
recommendations which dealt with various issues related
to the migration of FM Radio Broadcasters from Phase-II
to Phase-III.
Issues related to migration Authority recommends

Minimum channel
spacing
Acceptance and early implementation of its Recommendations on Prescribing Minimum Channel Spacing,
within a License Service Area, in FM Radio Sector in India dated 19th April, 2012.
Period of Permission
The period of permission for the existing operators, who migrate from Phase-II to Phase-III, should be fifteen
(15) years from the date of migration.
Date of migration from

Phase-II to Phase-III
policy regime
A cut-off date, for the existing FM radio operators, for migration from Phase-II to Phase-III of FM Radio
broadcasting should be fixed by MIB after the completion of auction process for Phase-III of FM Radio.
This cut-off date should not be later than 31 March 2015. Also, the Authority recommends that an explicit
provision needs to be incorporated in the Notice for Inviting Applications (NIA) to permit an existing Phase-II
operator to bid for an additional channel (frequency) in existing cities, where it already has an operational
FM channel, subject to the condition that if it is able to win another channel in the existing city, then it
would have to migrate all existing channel(s) also to Phase- III on such terms and conditions as may be
prescribed by MIB.
Migration fee for

migration from Phase-II
to Phase-III
The migration fee should be:
Group X cities: Higher of
Phase-II average bid of the target Group X city multiplied by a factor of 1.5; or
Phase-II highest bid of the target Group X city increased by the average increase in auction prices in
Group Z cities (vis--vis their reserve prices) in the same category in Phase-III.
Group Y cities: Higher of
Phase-II average bid of the target Group Y city multiplied by a factor of 1.5; or
Phase-II highest bid of the target Group Y city increased by the average increase in auction prices in
Group Z cities (vis--vis their reserve prices) in the same category in Phase-III.
but, the lower of
The above; and
Phase-III auction price obtained in the target Group Y city.
Group Z cities - 42 cities where more than 1/3rd of the total frequencies are available for auction:
The actual auction price obtained in Phase-III.
In all cases, the residual value of the Phase-II permission, calculated on a pro rata basis, should be deducted
from the migration fee
Reserve Price for fresh
(new) cities in Phase-III
Auction
The methodology for determining the reserve price for fresh cities in Phase-III should be reconsidered as the
current methodology might jeopardise the auction.
Source: Telecom Regulatory Authority of India site: www.trai.gov.in/Content/ReDis/522_2.aspx
Phase-III offers exciting opportunities for companies to

expand both into new cities and within cities with a 2nd
and even 3rd frequency in the existing large markets.
With economic activity increasing in small towns,
operators have a positive outlook for these markets. In
the smaller towns, the share of radio is higher than what it
is in the bigger towns, in some markets, the share of radio
is as high as 20 per cent33 of the print market.
Also, given the large size of metros, there is a pressing
need to operate multiple channels in these markets,
which would make differential programming and targeting
of different sets of consumers possible. The policy also
has other features including giving broadcasters the
33. www.mxmindia.com
right to operate more than one channel in each city (thus

allowing for more programming variety, the ability to
target a different set of listeners), networking of small
cities with big ones (thus helping cut operating costs),
extending the license period to 15 years from 10 years
(thus reducing vulnerability to economic slowdowns)
and tradability of licenses (allows broadcasters to sell off
its stake in the radio company after 3 years instead of 5
years).
146
147
Phase III policy permits networking of radio

channels across the country and this shall be
used very effectively by operators for providing
local as well as networked content to cut both
capital and operational costs for ensuring
profitable operations. Phase III policy also shall
make available opportunity for owning multiple
channels in major cities which in turn shall
facilitate Niche Radio Channels.
-J.P. Nathani
General Manager,
Broadcast Engineering Consultants India Ltd,
(A Government of India Enterprise)
Bullish on radio
The 12 minute advertisement cap on the television channel has also
resulted in the advertisement money to start flowing to the radio
sectors. I see that trend continuing into next fiscal as the12 minute
cap is implemented more strictly across all channels.
Asheesh Chatterjee
CFO,
Reliance Broadcast
Background
92.7 Big FM has done considerably well this year recording a 25%
yoy growth in revenues and significant improvements in margins.
This was led by improved inventory utilization, with local and
regional advertisers playing a key role in increasing the demand for
radio inventory. This was further fueled by the 12 min advertisement
cap on TV channels thereby leading to a more equitable distribution
of the advertisement dollars. Also, on the cost side, we have been
able to look at improvement in efficiencies, partial networking,
economies of scale and changing the revenue mix by exiting low
margin businesses, this has contributed to sustainable growth in
margins.
Some of the key regulations that still need addressal are the
following :
Reserve price for phase 3

The reserve price for phase 3 auctions, is based on highest bid
received in the phase 2 auctions. This needs to be corrected as the
highest bidder in phase 2 auction, did not necessarily represent the
fair market price of the spectrum at that point of time. It has been
clearly demonstrated by the recently concluded telecom auctions
that a reasonable and fair reserve price leads to fair play and
successful auctions. I believe an average of phase 2 prices would
be a more reasonable reserve price.
For cities which are undergoing auction for the first time, I believe
the reserve price should be a nominal amount as the ascending eauction methodology enables price discovery on its own.
The radio industry is at an inflexion point and will emerge as a

major media segment in the coming years. One of the key problems
of the radio industry from a monetisation perspective was a)
restricted reach and b) lack of content variety leading to listener
fatigue.
Further, similar to the telecom auctions, there is a need to look at

a deferred payment mechanism for NOTEF. Also, there is need
to raise the FDI cap to 49% immediately, which will pave way for
necessary fund raising to take care of the next level of growth and
expansion.
At 92.7 Big FM we have undertaken in-depth listenership studies,

results of which drive programming innovations, we have
successfully gone Retro and created many successful celebrity
led shows like Suhana Safar hosted by Annu Kapoor, Yaadon ka
Idiot Box with Neelesh Misra and shows with leading names like
Madhurima Nigam and Talat Aziz.
Music royalty
Post Phase 3 private FM radio is estimated to reach 313 odd cities

across India or 85%-90% of Indias population.
The TRAI recommendation on reduction in channel spacing, if
accepted, will increase the number of frequencies in the top A+/A
category cities, thereby leading to content diversification and
growth in radio listenership in an otherwise mature market with
untapped potential given the Advertisement to GDP ratio in these
cities.
The new Copyright Act has paved way for statutory licensing for
radio operators on the basis of a royalty rate which has to published
by the copyright board. But the new copyright board has not been
reconstituted consequently no royalty rate has been prescribed.
There is a pressing need to implement and publish the applicable
royalty rates before the phase 3 auctions.
Coverage of New /Current Affairs / Sports

The phase 3 regulations will allow news and current affairs to be
covered by private FM but has restricted sourcing of the same from
a few government bodies only. The sourcing of news content should
be made more flexible. As in todays day and age of social
networking, news is a commodity which has already reached the

market through multiple co-existing medium. Restricting it on only
one particular medium makes it unfair for that medium.
Secondly, the definition of Live Sport of national importance needs
to be explained and expanded, so as to include all kinds of sports
played anywhere in the world.
Monitoring charges:
Today the private FM sector pays the government towards
monitoring charges. These charges put an exorbitant burden on
the radio sector and are only unique to private FM radio sector. The
private satellite television sector does not have any such burden. To
create a level playing field in the media entertainment space, these
additional costs need to be rationalised to make the radio sector
competitive and profitable.
Service tax
Radio Advertising falls in the ambit of service tax although print
advertising, internet advertising and out of home advertising have
been given an exemption and included in the negative list. This
again creates an anomaly where one very small segment of media
and entertainment industry, Radio, which is truly a free to air
medium for the common man has been subject to service tax, while
the larger components (Print, OOH, Internet) have been excluded.
Conclusion
I believe that if some of these anomalies are addressed, the radio
industry can rise to its true capability and potential. Radio can
reach where Print, TV, OOH cannot reach, given the demographics
of our country, illiteracy levels, power issues, TV penetration, etc.
I believe Radio has the potential to double its share in the overall
advertisement pie, making it one of the highest growing sectors
within the media and entertainment space.
provided by the author Asheesh Chatterjee. The views and opinions expressed herein are
those of the authors and do not necessarily represent the views and opinions of KPMG in India.
Migration of existing licenses

The government was initially of the view that once Phase
III auctions were completed, they would commence the
process of renewing the current Phase II licenses. Since
many licenses will start expiring from April 2015 onwards,
the next two years are crucial for the renewal process.
The government has however given indications that it
would want existing broadcasters to continue after their
current license term expires. Clarity on the process of
renewals is awaited and with licences due to expire soon,
there is very little time left.
In light of the delay in auctions and Phase 3,

we look forward to an urgent resolution of the
migration formula by MIB in conjunction with
TRAI so that we can showcase the long term
viability and success of the business model to
investors.
-Apurva Purohit
Radio City
Ammendment to the Copyright Act and

subsequent appeal filed by music labels
Previously radio networks were required to pay a needle
hour royalty to music companies and the cost of these
royalties amounted to 10-50 per cent of a radio stations
annual revenues.34 Both Houses of Parliament passed
the amendments to the original Copyright Act of 1957
in May 2012.35 The Copyright (Amendment) Rules 2013,
which prescribe rules for statutory licenses, were notified
in March 2013. The provisions of Statutory License has a
significant impact on the operations of a radio company
as it ensures unfettered access to music at rates fixed by
a statutory authority, approximately 2 per cent of a radio
stations annual revenue.35 Super Cassettes Industries
Limited (T Series) has filed a writ petition before the
Delhi High Court challenging the constitutional validity of
the provisions of statutory licensing as described.35 The
outcome of the said appeal may have an impact on the
entire radio industry.
Measurement
Measuring audience composition is an additional
challenge, making it difficult for stations catering to a
niche audience to convince advertisers of their targeted
reach. Industry players and advertisers all cite the need for
a robust measurement system covering all radio markets.
This is crucial to ensure that multiple genres can co-exist.
News on radio35
The ban on broadcast of news programmes by private
radio operators has been a constant issue for the
radio sector. Over the years, radio operators and the
Association of Radio Operators in India (AROI) have tried
to get the Government to change its stance. A Public
Interest Litigation (PIL) was filed in the previous year
by social activist Prashant Bhushan, following which
the Supreme Court questioned the Government on the
reasons behind the existing ban. The Governments
primary concern is that it lacks a regulatory system to
monitor content on radio channels.
Most private operators feel that the Governments
concern over security is not necessarily justifiable as
news is available across other media.
Foreign Direct Investment (FDI) cap in

radio36
In August 2013, the Telecom Regulation Authority of
India (TRAI) proposed increasing the FDI limit in private
FM radio broadcasting to 49 per cent from the current
26 per cent, according to recommendations posted on
its website. The recommendations, which have been
made following consultations with industry stakeholders,
are in line with those made by a finance ministry panel
led by Arvind Mayaram, secretary in the department of
economic affairs, on FDI caps across sectors, including
the media.
34. KPMG FICCI 2012 report: Digital Dawn

35. KPMG in India Industry discussions
36. www.livemint.com
148
149
The earlier increase in FDI cap from 20 per cent to

26 per cent in 2011 was not significant enough to
attract global radio companies, since radio is considered
as a sunset medium in most developing countries.
Hence, the proposed substantial increase from 26 per
cent to 49 per cent may possibly be a step in the right
direction towards attracting global companies.
The road ahead

Projected size of the industry
Amount in INR billion
Service tax37
Service Tax legislation in India has recently undergone
a paradigm shift with the introduction of Negative list
based taxation, under which all services are liable to
service tax unless mentioned in the Exemption list and
Negative list. The ad revenue earned by a radio company
continues to be liable to the standard rate of Service Tax,
which is currently 12.36 percent. Although the changes
implemented in the service tax legislation may not have
a significant impact on the revenues of radio companies,
expenses on which service tax is applicable has increased
with the introduction of the negative list-based Service
Tax regime. Now RJs and other persons like support
artists will charge service tax to radio companies, unless
they are employed by the radio companies, which could
result in an increase in the available Cenvat credit.
One of the major expenses for radio companies is
the royalty they pay to copyright owners for rights to
broadcast music. While licensing of copyright of original
works and cinematographic films has been specifically
exempted from levy of service tax, copyright of sound
recording or music will continue to be levied with Service
Tax as earlier. Furthermore, an increasing trend has been
witnessed of films and artists being promoted on radio
stations, and the radio stations are then termed as their
partners or sponsors. These barter arrangements or
marketing tie-ups for co-promotion and co-branding may
attract Service Tax.
The introduction of Point of Taxation Rules in 2011 led to
Service Tax becoming payable on invoicing, irrespective
of when the consideration is received. Selling of space or
time slots for advertisements other than advertisements
broadcast on radio or television forms part of the negative
list, thus, sale of space/ timeslots on radio is still liable
to service tax. The leading players in the industry are of
the view that inspite of the fact that radio is a cost free
and easy medium of mass communication, the aforesaid
benefit of exclusion from the levy of service tax is not
granted to radio industry which is an unfair treatment to it.
However this would result in an increase in the available
Cenvat credit.
37. KPMG in India discussion and analysis
Source: KPMG in India Industry discussion and analysis
The Radio industry in India is expected to witness a

significant growth during the forecast period. In the short
term, 2014 may not see any massive change, specially,
in the first half. However, it is expected that Phase III, as
and when it is a reality, will definitely add to the industry
volume. The industry, which currently brings in INR14
billion revenue, will see 839 new radio stations, across
227 plus towns coming up. With this expansion, FM
radio will likely touch 90 percent of the Indian population,
making it truly a common mans medium. The doors to
expansion will be opened and the industry expects to
see around 21 per cent year-on-year growth from 2016
onwards, assuming Phase III is in full steam.
The future looks hopeful with two other critical factors
pertaining to the industry finding a closure. One such
challenge was the Copyright Act (Amendment) Bill, 2012,
which was passed by the Lok Sabha on May 22, 2013
this year. This closure to a very long pending issue is a
constructive and beneficial step in truly recognizing the
real owners of music, which is so critical to the business.
Another key development in 2013 was the increase in
foreign direct investment (FDI) from 26 per cent to 49
per cent, making it a good time for strategic investors
to look at the industry. Pro-media policies are expected,
that may help clear backlogs and move things faster.
The increasing number of low-cost FM-enabled mobile
handsets and internet radio could also increase the
popularity of the Radio market in India.
Radio is one of the oldest mediums and

continues to be a free to air medium that
legitimately monetizes music, regulatory support
is required in determination of reasonable
reserve price and migration fee, increase in
number of frequencies per city, formation of the
copyright board and publishing of the royalty
rates linked to net revenue. This will improve
reach of radio and also ensure content plurality,
thereby taking industry to its true potential.
Broadcasters have an opportunity to create

value for the business and to the listeners
starting 2015, its the last mile with the trial period
getting over soon, FM Radio in India will emerge
in a Real race soon.
CFO,
Reliance Broadcast
- Sanjay Hemady
HIT 95 FM
Conclusion
Like in 2013, the FM radio industry is expected to
outpace the growth of the overall advertising industry in
the coming years. With a forecasted CAGR of 18.1 per
cent till 2018, industry revenues are expected to more
than double by 2018. Phase III is also now looking a
reality there is an expectation that the auctions should
commence before FY14 is over. Phase III roll-out is vital
for the FM radio industrys growth. The other segments of
the media industry have all grown by leaps and bounds.
More and more TV channels continue to get launched
every year, and today there are 750 plus channels
available. Newspaper groups have launched several new
editions of existing titles as well as new titles
Phase III migration and expansion is very

important for evolution of radio as a key
advertising media. Clarity on licence renewal
before the auctions take place by providing a
formula for extension would help existing and
new players to firm up their investment plans for
this phase.
- Satish Chander
Vice President,
India Value Fund Advisors Ltd
across the country. With more transport infrastructure

projects (airports, highways, etc.) getting completed, the
Out Of Home (OOH) industry has also got a boost. And
of course, the internet knows no bounds. In the midst
of all these fast growing alternatives to advertisers, the
radio must continue to remain competitive and cement
its place among media. It has had to rely on increasing the
utilization of available advertising inventory, but now with
inventories almost fully exhausted, the only way left to
grow further is to have more channels and increase rates.
Phase III is expected to provide the requisite growth
impetus.
150
151
Coming soon.My moment of radio

Some have done adjustments to suit themselves, some have stayed
with a hope, some had little choice and most had a dream and the
passion to make the dream come true.
Sanjay Hemady
HIT 95 FM
What can we learn from Radio To entertain, who all who comes
first?
The Broadcaster; The Advertiser; The Listener
Radio has been the not so cool but still playing to the ears of the
business and entertaining somebody sometime, and someday will
entertain all of us.
Radio is playing and playing with a will to demonstrate every single
day so that a crystal will emerge to show its true worth.
Radio dances to the tune, brings a smile and changes when the
wind changes, and the music and the rhythm changes.
This time will be remembered. All the secrets are now open
emerging research scenario, guidelines, time line driven processes
and the strength, only to know that what we start with now, will
take the shape of an evolving revolution to entertain to a new level,
a level that many started passionately more than a decade back.
FM Radio in India will go back to the kindergarten stage and emerge
as a new sunrise, challenger for all who believed in and have stayed
long, as long as they would like to believe.
Radio, ten years back and now, what and where we wanted to
be...the sparring and practice has built us strong, the confidence
will make us victorious, for the broadcaster, for the advertiser and for
the listener, we know now that there is somebody there, have stood
high For the love of Radio.
How can radio increase its share in the total advertisement pie and be
an attractive medium for advertisers. The following factors are linked to
each other that will bring in a smile;
Broadcasters strong belief in the medium
Research that should bring in transparency
Heterogeneous Content giving variety
Creative Talent and Freedom
Self Regulation Self Assessment - Acceptance
Demonstrate effectiveness
Confidence building measures for the Advertisers
Channel Spacing More Radio Stations
Positive Approach
Equal partnership between Advertiser Media Agency and the

Broadcaster nobody is above all approach.
Disclaimer: Unless otherwise noted, all information included in this column/ article was provided by
the author Sanjay Hemady. The views and opinions expressed herein are those of the authors and
152
07
Music
Waiting for the digital promise
Technology is transforming the way music is produced,

distributed, discovered, and monetised. In 2013,
consumption of music was increasingly on the go. Key
drivers were the growth in mobile devices, particularly
smartphones, more affordable data plans, and the
popularity of streaming services and mobile applications.
The spurt in live events has also been a catalyst for
growth, especially for independent artists, and this has
grown royalty revenues from public performances.
revenues, which already contribute 53 per cent of the

industry, are expected to contribute close to 62 per cent
by 2018.1
For the music industry, the opportunity for growth could
come from:
Nurturing and strengthening digital platforms such as
streaming and download services
However, there was a lag in monetisation of digital

consumption through subscription services. Connectivity
was a hurdle, as adoption of 3G networks was mostly
slower than anticipated and low willingness to pay and
hurdles in online payments remained dampeners. Further,
with the significant fall in CRBT (call back ring tones)
revenues and continued decline in physical sales, the
overall size of the industry in 2013 declined for the first
time in many years, by 10 per cent to reach INR9.6 billion1.
The shutdown of players like Flyte and Dhingana also
indicated that the industry is still in the process of finetuning digital business models and collaborations.
Customer centricity in every aspect; from digital
Going forward, digital revenues are expected to be driven

by the rapid growth in mobile devices, with increased
connectivity as 3G/4G networks advance. Digital
Expanding the B2B business of music in particular,
product design, to content curation, to exploration

of hybrid payment models to enable growth of
subscriptions
Partnerships and collaborations within the industry to
offer wider and innovative ranges of services across

devices and platforms
Expanding the business model to grow music related
services exploiting music rights through artist

management, and sync revenues from placement in
advertisements, videos, gaming etc.
packaging and licensing music with electronic devices.
Overall size and growth projections

Segment (INR bn)
2009
2010
2011
2012
2013
Growth in
2013 over
2012
Digital
2.6
4.2
5.2
6.0
5.1
-15%
5.5
6.3
7.5
9.0
11.0
16.6%
Physical
4.5
3.2
2.6
2.3
2.0
-13%
1.8
1.6
1.4
1.2
1.0
-12.9%
Radio & TV
0.5
0.7
0.6
1.4
1.4
0%
1.5
1.7
2.0
2.3
2.7
14.0%
Public Performance
0.2
0.5
0.6
0.9
1.1
20%
1.3
1.6
2.0
2.4
2.9
21.8%
8.6
10.6
9.6
-9.6%
10.1
11.2
12.9
14.9
17.6
12.9%
Total
7.8
2014p 2015p 2016p 2017p 2018p
CAGR
(2013-18)
Note: these are net revenues considering share of the music industry only
Source: KPMG in India analysis and industry discussions
Digital revenues still form the majority of the

market in 2013

154
A snapshot of the industry performance in 2013

Digital revenues have arrested decline in the global music market
Global Sales of Recorded Music
25
0.5
0.4
0.4
0.5
1.2
0.6
2.3
20
0.7
3.2
0.8
0.8
USD Billion
4.2
15
28.5
27.4
28.6
28.1
4.6
27.7
25.8
23.9
23.3
21.8
10
19.8
17.3
14.8
12.9
0.3
0.9
0.3
0.9
0.3
1
4.8
5.2
5.8
11.1
10.2
9.4
0
1997
1998
1999
2000
2001
2002
2003
2004
Digital
Physical
2005
2006
2007
2008
2009
2010
2011
2012
Synchronization
Performance rights
Source: Recording Industry of Japan, RIAJ yearbook 2013; IFPI 2012
Globally, the music industry is on a slow road to recovery,

primarily driven by growth in digital sales and services
across streams (subscriptions services, download sales,
streaming video, digital radio, performance rights and

synchronisation revenues), and increased measures to
control piracy.
There is growing significance of India in the global recorded music market

Digital Platforms Fuelling Growth
5,000.00
Retail Value (USD million) in 2012
155
USA
JPN
4,000.00
USA - United States
AUS - Australia
SKOR - SouthKorea
SWZ - Switzerland
JPN - Japan
CAN - Canada
SWE - Sweden
BLG - Belgium
UK - United Kingdom
BRZ - Brazil
SPN - Spain
NOR - Norway
GER - Germany
ITL - Italy
IND - India
AUR - Austria
FRA - France
NTH - Netherlands
MEX - Mexico
CHN - China
3,000.00
2,000.00
UK GER
FRA
1,000.00
SWZ AUR
BLG
0.00
ITL
SPN
CAN
AUS MEX
SKOR
NTH
NOR
CHN
SWE
IND
BRZ
-1,000.00
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Change : Per cent over 2011

Bubble Size : percentage of revenues though digital channels in 2012
Source: Recording Industry of Japan, RIAJ yearbook 2013; IFPI 2011, IFPI 2012, Top 20 Markets Global recorded sales
Digital channels have enabled greater reach for key global

players in the music industry. Major licensed stores and
services now operate in over a 100 countries in 2013 vis
a vis 24 countries in 2012.2 India, while still small in scale,
is one of the higher growth markets, driven by digital
revenue growth especially through mobile channels. This
has been evidenced by its shift from 23rd rank by IFPI, in
the global recorded music market in 2004, to 14th in 2012
(9th rank for digital segment).3 International music has
seen a growth in terms of familiarity and popularity. There

is hence, growing importance of India for global music
labels as well.
02. IFPI Digital Music Report 2013
03. Industry discussions, based on IFPI reports
Following is a summary of growth across the four key

revenue streams in the Indian industry; digital, physical,
royalties from Radio and TV broadcast, and royalties from
public performances.
Digital Sales in India are

driven by growth in mobile
India grew to have the second largest mobile base
globally of more than 900 million4, of which approximately
130 million accessed the internet via mobile devices.5
Last year saw rapid growth in smartphone adoption.
According to the International Data Corporation (IDC),
India became the third largest smartphone market in
the world in 2013, in terms of smartphone shipments
of 44 million units.6 Further, CY2013 also witnessed
a remarkable migration of the user base from feature
phones to smartphones, primarily due to the narrowing
price gaps between these product categories.6 Android
OS is estimated to have 90 per cent of the market share
of smartphones.6 Data plan rates have come down. The
telecom operators are expected to increasingly focus
now on increased data usage; music is likely to be a
key component. For example, streaming service Gaana
saw a 50 per cent growth in mobile consumption in
the last quarter of 2013.7 According to Comscore India
Digital Future in Focus 2013, 24 per cent of users access
music on the go (mobile or tablet) vis a vis 76 per cent
on PC.8 There has also been a growth in awareness and
availability of music based applications. This has been a
significant driver overall, for digital music services.
Devices used most often to listen to music: in India

Mobile matters!
Overall, there has been a shift in composition of digital

revenues. The fall in RBT (Ringback tone) revenues due
to TRAI guidelines has been compensated to some
extent by growth in other revenue streams, but given its
dominance over digital revenue market till now, this has
resulted in an overall decline in revenues by 15 per cent to
INR5.1 billion in 20139 :
Shift in composition of digital revenues9 in India

Digital revenue 2012
7%
Audio Streaming
3%
Video Streaming
9%
Download
58%
RBT
23%
Bundled
Digital revenue 2013

5%
Video Streaming
10%
Audio Streaming
12%
Download
39%
RBT
34%
Bundled
Source: KPMG in India analysis and industry discussions
Note: based on an online survey conducted in April 2012 across 26 global markets.
Source: Ipsos Global @dvisor: Music Matters 2012
We have summarized the performance across the four

main sub-categories of digital music offered:
Streaming services
Ringtones and Caller Ringback tones
Music bundled with consumer devices like phones and
laptops
Download stores
04. TRAI performance indicator report, Sep 2013

05. KPMG in India Analysis
06. IDC Press release, 26 February 2014
There has been a year-on-year drop in the CRBT

revenue post the TRAI regulation, however the
digital segment is still growing strong due to
growth in streaming sites and other online sales.
A hybridised model is expected to kick-off in the
coming time which will be a mix of download and
streaming. Also, such platforms are expected to
carry curated content which will also witness
some traction in the coming time.
- Mandar Thakur
Times Music, a division of the Times of India
Group/BCCL
07. Gaana management

08. Comscore India Digital Future in Focus 2013
156
157
Growth in the streaming story; revenues still

undermine the potential
Globally, there has been strong growth in streaming
services, as consumers increasingly perceive value
in getting ubiquitous access and these services have
entered new markets and seen overall expansion.
According to estimates from IFPI, there was a 44 per cent
growth in 2012, resulting in 20 million paying subscribers
globally.10
For example, in Europe, where streaming services are
well established, particularly in Scandinavia, subscription
revenues already account for approximately 20 per cent of
total digital income in 2012, vis a vis the global average of
around 10 per cent.10 There are different models followed.
Some offer a free tier and then aim to upsell users to
their premium paid for services, others offer an initial
trial period before aiming to convert users to their paid
service based on a monthly fee. New services such as top
40 chart apps are moving away from the monthly pricing
model. Bundled partnerships are driving growth.
In India, streaming services such as Gaana, Hungama,
Saavn, Raaga, have all seen a significant growth in traffic
as well as engagement in 2013. For example, stream

consumption grew 2.5 times for Gaana.11 While these
services had been offered for free initially, 2013 saw the
introduction of subscription offerings (see table for pricing
details). These have seen a slow start, but the industry
believes that with price discovery and experimentation
with hybrid models (including elements of free and
paid, download and streaming) these models could
see increased uptake from 2014. This can be critical in
balancing the current advertising supported model. Video
streaming (on YouTube in particular), has also emerged as
on of the strong revenue streams for the industry.
Where these sites play a key role is in bringing in legal
customers, as the industry still struggles with massive
piracy in the market. Yet, with the subscription model
yet to take off, these sites have still not monetised the
potential consumption. We saw the shutdown of one
major player Dhingana in 2013, as well as shutdown of
the Network 18 owned in.com.12 Besides the challenges
of a price sensitive market, they remain hampered by
slow internet connections, and relatively low rates of
awareness of the services.
Key websites offering music streaming services in India

Company name
Saavn
Gaana
Hungama
Overview
Saavn (South Asian Audio Visual

Network) was launched in 2009. The
company's products include Saavn.com,
Saavn Music for iPhone, and Saavn
Music for Android. The company is
based in New York, USA.13
Gaana.com, launched in 2011. The

website was launched by Indiatimes
and is a provider of both Indian and
international music content14.
Hungama.com was launched by

Hungama Digital Media Entertainment
in 199915.
Services
offered
Online music streaming, offline music

access, creating playlists and sharing
playlists on social media such as
Facebook. The website also has an
internet radio option.
Online music streaming, creating

playlists, offline music, sharing
playlists via Facebook. Also has
internet radio and Radio Mirchi.
Music streaming and download of

music tracks, ringtones, videos and
mobile wallpapers for Android, iOS
and PC. The website also provides
streaming movies.
Catalogue
Saavn distributes its catalogue to

75+ global companies including Time
Warner, Verizon and iTunes.
Investors
212 Media developed Saavn. It is a

The website is a part of Times Internet Intel Capital, in October 2012, invested
New York City-based, privately-held,
which is promoted by The Times Group in Hungama.com18.
venture funded firm, founded in 200416. (90 per cent stake) and Sequoia Capital
(10 per cent stake)17.
The entire Indian music catalogue

is available to users worldwide, but
only users in India have access to
international music. The website
The company has over 250,000 music
features music from 21 languages tracks, 20,000 music videos and 10,000 Hindi, English, Kannada, Malayalam,
ringtones. The company provides
Marathi, Punjabi, Tamil, Telugu and
music in Hindi, English, Tamil, Marathi, other Indian regional languages.
Punjabi, Bengali, Gujarati, Kannada,
Bhojpuri, Malayalam and Telugu 16.

11. Gaana management
12. Indian Music Streaming Service Dhingana Is No Longer Running Its Business, Businessinsider.
in, 14 Feb 2014
13. http://en.wikipedia.org/wiki/Saavn - accessed on 3 February 2014
14. http://en.wikipedia.org/wiki/Gaana.com accessed on 3 February 2014
15.
16.
17.
18.
The website has a library of over

2.5 million across genres and
languages, in the form of music tracks,
movies, music videos and dialogues;
mobile content such as ringtones &
wallpapers. The website provides
content in Hindi, English and regional
languages (Tamil, Telugu, Kannada,
Punjabi, Bhojpuri, Gujarati, Marathi,
Bengali).
http://en.wikipedia.org/wiki/Hungama_Digital_Media_Entertainment accessed on 3 February 2014

http://www.212media.com - accessed on 3 February 2014
http://en.wikipedia.org/wiki/Indiatimes accessed on 3 February 2014
http://www.medianama.com/2012/10/223-intel-capital-invests-in-hungama-digital-40-million-in-10companies/ accessed on 3 February 2014
Company name
Saavn
Gaana
Hungama
Pricing
models
Online streaming and playlist creation

is free for subscribers. For removal of
ads and offline storage of music:
Online music streaming and radio is

free. Subscribers can opt for Gaana+
for offline music facility and removal
of ads.
Following subscription plans:
Saavn Pro: INR220 per month with

uninterrupted music on unlimited
devices, and up to 3GB of music saved
on any device, with a 30 days free trial
Saavn Pro Lite: INR110 per month on
one mobile device, and up to 1GB of
saved music19.
Gaana+ service comes with a 15 day

free trial after which users need to pay
a monthly subscription fee of INR110
with high audio quality at 320 kbps20.
Single download: INR10 for single

music track, ringtone, video or mobile
wallpaper.
Value pack: any four items for
INR20 for downloading music
tracks, ringtones, videos and mobile
wallpapers.
Super Value Pack: any 99 items for
INR99 for downloading music tracks,
videos, mobile wallpapers, animations,
ringtones, fun tones.
Unlimited downloads: INR99 per
month for unlimited download of music
tracks, ringtones, videos and mobile
wallpapers21
Telco tie-ups
Tata DOCOMO: GSM prepaid

subscribers who will recharge with
certain 2G internet packs, to be
provided with 100MB of free data to
stream Saavn music22.
Airtel has a tie-up with Gaana.com

to provide customers across India to
select and subscribe to Hello Tune via
Gaana.com23.
Going forward, growth will likely depend on the success

rate of conversion to subscription models. At least one
key global player is expected to enter the Indian market.
Telecom operators are also launching their own branded
music services. 4G and greater uptake in 3G services
is likely to grow the market. The anticipated growth in
penetration of smartphones is also likely to drive the
market further, as streaming services are smartphone
friendly. 2014 is likely to be a year of discovery and fine
tuning the proposition both in terms of variety (e.g.
language or genre based packages) and pricing (e.g.
hybrid models).
The contentious issue of viability of the upfront Minimum
Guarantee (MG) model for streaming services may
require labels and services to come together to build a
model that ensures sustainability of a promising revenue
stream, while ensuring equitability for all. Greater
transparency across the system, and hence more
accurate data reporting across the value chain, can also
build trust which could drive more equitable revenue
sharing structures.
19.
20.
21.
22.
23.
24.
Mobile company Karbonn entered into

a tie-up with Hungama.com to provide
Hungamas Music App on Karbonns
devices.
Tata Docomo tied up with Hungama
Mobile to provide its pre-paid users
with access to unlimited music. The
VAS service is known as Endless
Music and enables users to listen
to music for a set period of time
depending upon the recharge done24.
My belief is that the next two years will see the

evolution of a strong music streaming market
in India. If you look at the ecosystem, it is all
lined up to make this happen. Mobile internet
penetration is growing rapidly on the back of
3G/4G spectrum, accessible data pricing and a
richer experience, thanks to the growing smart
phone penetration. The key is that, unlike the
west, we must have a revenue model that is not
dependent merely on advertising.
With most telecom players and device
manufacturers actively curating their own
branded/co-branded services, bundling music
with data and devices and the imminent entry
of global platforms who will add to the already
entrenched Indian players, we see a streaming
revolution of sorts in the not too distant future.
http://pro.saavn.com/ accessed on 3 February 2014

http://www.medianama.com/2014/02/223-saavn-operator-billing accessed on 3 February 2014
http://www.hungama.com accessed on 3 February 2014
http://www.tata.in/article/inside/5cJqriOYTX0=/TLYVr3YPkMU accessed on 3 February
http://telecomgyaan.com/2012/04/bharti-airtel-announces-airtel-store-hello-tunes-on-gaana-com/ accessed on 3 February 2014
http://www.watblog.com/2013/11/12/tata-docomo-ties-up-with-hungama-mobile-to-give-its-prepaid-users-affordable-access-to-music/ accessed on 3 February 2014
- Neeraj Roy
Managing Director and CEO,
Hungama Digital Entertainment
158
159
Key players are likely to focus on:

Measures to grow customer engagement by
enhancing the customer experience
Increased collaborations for content aggregation, with
devices and telcos
Increased marketing and greater integration with social
networks to grow awareness of these services.
SOUND BYTE: Music market in

Sweden - A streaming success
The success of digital music in Sweden is attributed to uptake
of subscription services, telco partnerships, marketing, and the
crackdown on pirated sites. Subscription services have played a
pivotal role as against the download model in this market. With the
launch of music streaming site Spotify in 2008, revenues from the
digital medium witnessed growth as the consumer could stream
music for a month at the cost of one album download, driving more
legitimate consumption of the content.
Digital revenues accounted for 76 per cent of music sales in

2012 and more than 90 per cent of digital sales were from
streaming services25
Per Capita music spend jumped by 15 per cent between 2008

and 201226
Spotify is considered the largest source of digital revenue in

Sweden and over a third of the population used this service26.
Streaming v/s Downloads per cent of

digital revenues in 2012
Source: http://www.bbc.com/news/business-22064353
Partnering with telcos brought reciprocal benefits. Spotifys

partnership with major telecom company Telia Sonera, and
Deezers partnership with T-Mobile enabled it to get instant
customer base access, and these services were also heavily
marketed. On the other hand, positioning Telia Soneras new
mobile data plan around Spotify was a catalyst for data plan
adoption.27 A change in the existing business model, collective
approach by both industry stake holders and the consumers to
fight piracy and adoption of new services driven by increased
awareness, resulted in growth of streaming services in Sweden.
25. Wall Street Journal 27 January 2014

27. Building the new business case for Bundled Music Services, MiDiA consulting, report
commissioned by Universal Music, July 2013
Monetizing Digital Music Platforms
Pawan Agarwal
VP and Business Head,
Gaana, Times Internet Limited
The Digital Music industry saw a lot of activity in 2013, from online
music consumption growing by over 100 per cent on digital music
broadcasting platforms like Gaana, to artists from the digital/social
world being signed up by big music labels in India. Piracy continued
to be the biggest challenge for the Indian Music industry, and a few
services shut down in the digital music broadcasting space due to lack
of monetization and challenges with licensing music.
Despite best efforts from the industry, online music piracy doesnt seem
to be anywhere near its demise. The most significant force to curb
piracy, globally, is the emergence of online digital music broadcasting
platforms. Piracy being rampant, consumers in India have a low
willingness to pay for music but based on whats happened globally and
with some other industries in India the consumer is willing to pay (a
premium) for convenience and experience.
Convenience and a high quality, engaging experience is the key to
increase adoption and monetization of any digital music platform.
Building a world-class product that offers an unparalleled music
experience is top priority across online music services such as ours.
Some of the key focus areas:
Access to millions of songs across platforms, anytime, anywhere.
Consumers now access and consume content across multiple devices
and platforms and expect a hassle-free access across devices.
Curation bring the best of music across languages and genres. For
eg, professionally curated Radio Mirchi streams on Gaana have the
highest engagement in terms of average listening time as per google
analytics.
Personalization music to suit consumers tastes and preferences.
Technology enables a high degree of personalization, a big value
proposition of any digital music platform.
Discovery introducing consumers to new music through their social
circles. The service has to seamlessly integrate with various social
networks, enabling social music recommendations to the consumer.
Its truly been an exciting year for the digital music broadcasting
industry, with mobile adoption growing faster than desktop.
Monetization should follow in the coming years. However, some of
the major challenges with monetizing online music broadcasting
businesses in India are:
Exclusive Content Rights Owing to the exclusive arrangement

between one of the dominant music labels and one of the digital music
services, theres no single service on which consumer has access to all
the music. Its unfair to expect a lot of consumers to pay for a service
that doesnt have most of the new popular content. Such exclusive
arrangements around various commercial rights are anti-competitive,
hurt the entire eco-system and could be fatal for the digital music
broadcasting industry.
Minimum Commitments vs. Revenue Sharing Digital
broadcasting is an evolving industry, theres going to be a lag between
adoption and monetization. The gap between content costs and
revenues from advertising and subscriptions is huge. For the industry
to flourish, the incentives need to be aligned for the content owners
and distributors. The content owners need to take a longer-term view
of business by supporting revenue-share based licensing as opposed to
minimum commitments.
Mobile/Micro-payments Price discovery is yet to happen for
online music. Plug-and-play mobile payment services are required to
experiment with various pricing models.
Digital Audio Advertising, a relatively new concept Brands are
increasingly demanding advertising innovations that provide the right
returns on their investments. Hybrid audio-visual advertising based
experimentation and innovation should lead to higher revenues from
digital music broadcasting platforms.
The music industry is witnessing declining physical sales, mobile VAS
revenues, and music consumption shifting to digital. With increasing
adoption of smartphones and mobile Internet getting cheaper, digital
music broadcasting is poised to grow, provided the eco-system is
supportive of the model.
Unless otherwise noted, all information included in this column/ article was provided by Pawan
Agarwal. The views and opinions expressed herein are those of the authors and do not necessarily
160
161
Caller ringback tones (CRBT) market falls; can

collaboration and innovations revive this space?
The ringback tones market, once a significant revenue
earner for the music industry, has seen a significant
decline in 2013, on the back of the TRAI directives to get
consumer confirmations for activation and renewal of VAS
(Value added services). 2012 saw the initial impact with a
fall of around 15 per cent,28 after the mid-year introduction
of the TRAI directive, but the greater impact was felt this
year. Across the industry, players have seen a fall in CRBT
revenues ranging from 30- 50 per cent28 as this has now
become a pull versus a push business. Once estimated
to have a 90-100 million consumer base, this market is
estimated to have fallen to around 55 million in 201229 and
further to approximately 30 million28 in 2013. The telecom
companies also effectively offered lower sachet pricing
options which has resulted in shift of volumes of RBT to
lower price points (including INR1 daily modules vis a vis
monthly packages at INR30 or song switches for free30).
New VAS products, including voice based RBT, could
potentially further compete with CRBT.
Going forward, the other digital revenue streams such
as streaming and download stores are estimated to
grow at a higher rate vis a vis the CRBT market. Reviving
this segment could take place through innovations
such as enhanced discovery mechanisms, applications
for browsing and downloading RBT, or personalization
options, and advertising RBT. For example Saavn has
partnered with Vodafone and Airtel to offer CRBT on their
website, and close to 5-6 per cent of their web users in
India are already transacting for RBTs.31
SOUND BYTE: Reviving the RBT Market

in Indonesia through collaboration
Circa 2003-2011: The Indonesian music industry became
significantly reliant on RBT sales in this period (with some upto
90 per cent of revenues) 32 and telecom companies were strong
in promoting the same, as their VAS revenues climbed in the face
of declining voice and messaging services. The service generated
gross recurring annual revenues in excess of USD100 million in
the period 2008 to 2010.33 At this time Indonesia was the fourthlargest RBT market in the world after Japan, South Korea and
China33
Oct 2011: The regulator BRTI (Badan Regulasi Telekomunikasi
Indonesia) directed telecom companies to deactivate RBT services
following complaints from consumers who could not unregister
from these services, and for credit theft cases. This remained in
force for a year, causing significant disruption
December 2012: Indosat, XL Axiata and 12 of Indonesias largest
music labels, launched a major initiative to support ringback tone
sales. The program integrates the promotion of ringback tones of
both telcos, formerly using separate dial-in numbers, to a single
code applicable to both telcos, and also combines the marketing
budgets of both telcos. The telcos are now investing heavily again
in promoting ringback tones to their customers. The telcos are
targeting 100 per cent growth in subscriber base over 2013.34 For
example, by July 2013 XL RBT service subscribers reached 60 per
cent of what it was prior to the Black October 2011 situation.35 XL
claimed their RBT subscribers reached 6.5 million as on July 201335
Collaboration with key music labels and telecom

companies, to develop and promote relevant products,
and simplifying discovery and subscription processes,
(e.g. through single codes) may be the key to growing
this segment back again (see Indonesia case study inset).
28.
29.
30.
31.
Industry discussions by KPMG in India

Caller tune revenues no music to telcos ears, Business Standard, 08 Mar 2013
Soundbox.co.in Can the RBT be revived October 2012
Soundbox.co.in, Rishi Malhotra, Saavn as quoted in What is on the cards for Saavn in 2014
January 2014
32. http://www.thejakartapost.com/news/2013/05/10/digitalized-tunes-back-liven-local-music-industry.
html
33. http://redwing-asia.com/analysis-posts/is-there-money-to-be-made-in-the-indonesian-musicindustry/
34. http://en.indonesiafinancetoday.com/read/27524/Indosat-XL-Target-100-RBT-Service-Growth
35. http://www.idnfinancials.com/n/4921/XL-eyes-Rp500-billion-revenue-from-VAS
Telco bundled services see growth - to contribute

18 per cent of music industry revenues36
The market for telco bundled services saw introduction
of several new partnerships in 2013. Given the market
context where there is still low willingness to pay for
music or subscription services, this translates to a winwin situation as the telcos are looking at music as a driver
for differentiation, reaching out to a younger demographic,
and device and data promotion, and music companies
benefit from access to the large user base, potential from
habit formation, telcos marketing push and the pricing
subsidy. This proposition also aids discovery of music, and
importantly, simplifies the billing process in a market with
low credit card penetration.
The flipside to this, is the risk of consumers getting
habituated to free music. Hence, higher engagement
during the trial period is key, including integration of social
engagement with friends, curation to enable laidback
experiences, and discovery of new music.
The Nokia Music Store which became a strong

contributor in 2012, saw a significant decline in 2013,
linked with a slowdown in handset sales.38 Nokia also
shut down its web version of the store, in line with a
mobile first strategy.39 However there were several other
partnerships that grew the market. Examples of bundled
services introduced in the Indian market include:
HP Connected Music
HP tied up with Universal Music and Hungama.com to
launch a subscription based service called HP Connected
Music that offers more than one million songs across
different genres. The service is available on select HP
notebooks and the users can download free unlimited
music for a period of one year.40
Hungama app on Karbonn mobiles
Karbonn has partnered with Hungama to pre-load
Hungama Music App on latest smartphones.41 Similarly,
Panasonic has tied-up with Hungama.com for its latest
smartphone - T31.42 It gives the consumer unlimited
access to the content for up to 30 days
Globally, while streaming services are getting better

established, a significant chunk of streaming users
does not pay; partnering with telcos is bridging that Sony Music Jive
gap
Sony Music India has launched this music streaming and
downloading app globally with Sony Xperia smartphones.

It has a catalog of two million songs across different
genres. The service is free for the first six months.43 This
application is also pre-installed on the Sony Vaio range of
laptops 43
80%
Premium
13%
40%
8%
9%
5%
Average
Sweden
Spain
Norway
25%
France
US
UK
Germany
10%
11% 36% 35% 37%
3% 6%
18%
12%
12% 11% 14%
Netherlands
0%
Saavn and Tata DOCOMO
19% 17%
52%
20%
Denmark
Percentage of consumers
Free
60%
The partnership allows DOCOMOs subscribers access to

Saavns catalog of over a million songs via special streamanywhere data plan. Plans are available for DOCOMOs
GSM Prepaid customers with three different tiers of
music streaming capacity: 500 minutes, 1000 minutes
and 2000 minutes.44
Source: Building the new business case for Bundled Music Services, MiDiA consulting, report
The device- bundled music services market has

seen strong growth over 2013 to reach a size
of approximately 175 crores. This is a win-win
proposition both for device brands and the music
industry. Streaming Apps and Services are the
other segments to have witnessed growth, and
are playing an important role in driving traffic to
legitimate websites and giving consumers a full
track experience.
There are many success stories globally, with around 50

music-telco partnerships live across six different global
regions.37 These include Spotify and Deezer deals with
Orange, and Beats music and Rhapsody bundled with
AT&T. A July 2013 MidiA Consulting report commissioned
by Universal Music, studied many of these cases and
assessed that globally, around 55 per cent of promotional
offer users converted after one month.37 Key success
factors included placing the music branded offering at
the heart of the promotional strategy, clear measures to
assess music service impact including growth in ARPU
and stickiness as a result of bundling, and a consumer
service focussed mindset.

38. Industry discussions by KPMG in India
39. Nokia: Not Out as Yet, Soundbox.in, October 22, 2013
- Shridhar Subramaniam
President, India and Middle East,
Sony Music Entertainment
40.
41.
42.
43.
44.
Medianama.com 31 January 2013

Medianama.com 16 July 2013
Yahoo news 16 October 2013
Medianama.com 6 March 2013
PRweb 25 June, 2013
162
163
Downloads continue to contribute to digital

revenues
Globally, major players such as Apple, Google and
Amazon, have expanded the market for download stores.
Apple iTunes still underpins the growth of the

digital market
Videocons Planet M.48 With labels now increasingly

focusing on measures to grow the digital market, there
are also challenges of lack of titles available in the physical
market.48
At the same time, physical sales still hold in some Tier
2 and 3 markets where lower internet penetration has
resulted in slow uptake of digital services. Some regional
language markets and genres such as devotional, classical
and fusion also see continued physical sales.
While this degrowth mirrors the global trend, physical
sales are still a major chunk of the global market
an estimated 58 per cent in 2012.49 In some cases,
innovations have brought about some renewed interest.
For example, Record Store Day brings together fans
and artists at record stores globally, on the 3rd Saturday
of April each year, to create experiences around sales.50
Special releases and promotions create buzz around the
event.
Note: Download revenue refers to top 10 global music markets

Source: midiaconsulting.com, Mark Mulligan, April 2013 using Apple and IFPI data
In India, while we saw the shutdown of Flipkarts Flyte in

2013, Apples itunes store completed a year. Its uptake
however is likely to depend on growth of iPhones and
credit card penetration. Apple still has just 2.3 per cent
market share in the price sensitive Indian market.45
Hurdles continue to be online payments, as less than 2
per cent of the Indian population has a credit card,46 and
low and slow broadband access. The key success factors
for digital services mentioned earlier, can be critical going
forward measures to enhance customer experience,
simplicity, flexibility and ease of search, access and
payment. Collaborations may be required to offer the
user the music he or she wants. Integration of cloud
based features provide access to the users music library
anytime anywhere. There is always likely to be a segment
of customers that would like to own music vis a vis rent.
Physical sales continue to decline, with

further shutdowns in music retail stores
The growth in digital consumption of music (through legal
and illegal channels) has continued to eat into the share of
physical sales, which saw a continued decline of around
13 per cent in 2013 to reach INR2 billion.47 2013 saw
further retail shutdowns such as the MusicWorld chain,
or several Reliance TimeOut stores, and significantly
reduced music in the product mix in chains including
Tatas Landmark, Shoppers Stop Crossword and
45.
46.
47.
48.
49.
50.
RBI data
http://www.paymentsjournal.com/Content/Featured_Stories/16443/
Soundbox.co.in, Are the Shutters rolling down October 2013
IFPI Digital Music report 2013
Record Store Day: Saving Independent Music Stores Since 2008, Huffington Post, 20 April 2012
We have also seen Indian players innovating with formats

such as kiosks inside other stores, for digital content or
shop in shop. For example, Giri Traders, a retailer with
origins in South India, set up over 40 music download
kiosks across Tamil Nadu, leveraging a model where
albums are updated online and distribution is still physical
across locations.51 Another example is Sony DADC, that
has consolidated catalogues of Sony and Saregama,
which has tied up with over 100 Niligiris stores in South
India to retail music and is considering non-traditional
outlets as well.49 Vinyl records is another small but
growing space with dedicated fan base that has increased
their collections.52
Amazon.in launched its music store in India in February
2014. It has positioned it as the largest online physical
album store in India, with options to purchase over
400,000 Indian and international albums including the
Warner Music repertoire from Sony DADC;53 digital
downloads are currently not an option.
Going forward, the industry believes that the decline may
eventually plateau in 3-4 years (possibly sooner in urban
areas).
Music consumption has gone up many fold,

however the consumption habits have changed.
With the influx of satellite channels and data
on mobiles, music consumption is now on the
go. Thus the life cycle of most of the music
release is not more than 4 weeks. Its not too far
when music composers and singers will find no
revenue coming from physical sale of CDs.
- Sanjay Karwa
Planet M Retail
51. Retail Plus Chennai, Music Add-On

52. Industry discussions with KPMG in India
53. http://tech.firstpost.com/news-analysis/amazon-adds-new-stores-video-games-musicluggage-217728.html
SOUND BYTE: Japan (the second largest

digital market globally) and South Korea
see growth in physical sales
While globally, physical sales are on a decline, there is an
interesting trend of how companies are innovating in the physical/
packaged music market, with deluxe products such as box sets,
and bundling these with premium products or experiences, such
as memorabilia, merchandize or concert tickets. This has worked
particularly well with a core fan base, or an older demographic.
For example, in Japan, co-existing with a strong digital sector,
physical sales formed 80 per cent of total sales in 2012, up from
75 per cent in 2011.54 The first driver for this deviation from the
global trend is the strong local pop industry, with intense fan loyalty
amongst the youth segment, that purchases special edition CD
sales, or CDs bundled with tickets, artwork and special inserts.55
The second is the older demographic in Japan, which is still more
attached to physical goods.55 In South Korea, sales are expected to
have increased for the third consecutive year, driven significantly by
K-Pop acts whose fans demand high-quality physical formats and
deluxe box sets.56
Fall in radio royalty revenues offset

by growth in royalties from television
broadcast segment
The royalty received from radio and television broadcast
segments was INR140 million in 2013,57 constituting
15 per cent of the music industry revenues. For radio
royalties, there has been a fall post the change in royalty
rate from the earlier weighted average of INR660 per
needle hour to a net advertisement revenue share of 2 per
cent. This change was effected based on the compulsory
license granted at the fixed royalty rate to the radio
industry for all works falling in the repertoire of PPL. This
however excludes some key music labels such as T-Series
and Yash Raj.
However, this fall was offset by a 20 per cent growth in
royalties received from television broadcasting.58 The
television music channel segment showed robust growth
over last year, including demand from new entrants in the
regional music space, and music based content in GEC
and other channels, resulting in appetite for Bollywood
and other music content. Going forward, there is likely to
be continued growth in the music channel segment, with
additional entrants expected to enter the space in niche
genres.
The royalty mechanism for television is currently
determined through negotiated voluntary contracts.58
However, with the 2012 amendments to the Indian
Copyright Act stating that statutory license would make
it mandatory for content owners and music companies to
provide content to radio and television companies at rates
as determined by the Copyright Board, there is some
uncertainty in the industry as to the kind of impact this
would have on television royalties and interpretation as
54. Recording Industry of Japan, RIAJ yearbook 2013; IFPI 2012
55. http://money.cnn.com/2013/08/19/news/japan-cd-music/
to content covered by this clause.58 2014 is likely to see

greater clarity with the constitution of the Copyright Board
and clarification on nature of and applicability of rates.
The auction of Phase-III of radio licenses is expected
to benefit the music industry with an additional 839
frequencies across 227 plus towns coming up for
auction.59 Although the immediate term impact is likely to
be negligible, and advertisement based royalty is relatively
low in these markets, over the medium to long term, the
music companies are likely to benefit from increased
penetration of radio as a tool for music discovery and
promotion in these markets.
Surge in live events drives Public

performance royalty revenues
With the growing demand for music in commercial
establishments such as malls, pubs, hotels etc. and
mandatory procurement of license for playing copyrighted
music in such establishments, the public performance
business has witnessed a steady growth in the year 2013.
The tone was set in the year 2012 when the country
witnessed a surge in live music events. In the year
2013, music events continued to hold a larger share in
the overall live-events pie.58 (See chapter on live events
business for a detailed look at growth drivers)
The growth in public performance revenue is also
attributed to the increased awareness among the
audience after the enactment of Copyright Act. The Act
allows payment of royalty to the owners of copyright.
The revenue from public performance segments was
at INR1.08 billion, which grew by 20 per cent over the
previous year.57
Key themes in 2013

Film music still the dominant genre, but non
film genres including other regional music,
devotional and international music see
growth
Film music still dominates approximately 65 per cent of
music sales in India.58 Bollywood dominates at least half
of that, followed by regional film music markets such as
Tamil, Telugu and Punjabi.58 The success of these music
albums is highly correlated with success of the films
and they have the backing of strong promotional spends
by the film fraternity. The strong symbiotic relationship
with music and films continues, evidenced by traditions
such as pre launch of music albums to publicise the film.
According to the Ormax Bollywood Audience Report
(2013), music channels and internet promotions are the
strongest sources of promoting new film awareness
amongst youth. The music preferences of the Indian
consumer have been evolving, and they have been
catered to, with increasingly contemporary and western
influenced interpretations of the traditional sounds of
Bollywood songs. Further, with the trend of multiple
music composers often collaborating on film projects,
there are fresh styles emerging.
59. Another 227 places to tune in to FM, Business Standard, 08 July 2011
164
165
SOUND BYTE: Punjabi music market:

independent artists lead the way
The Punjabi music industry is an interesting case of strong growth,
and not just from the film sector but across genres (pop, devotional
and folk). Key drivers include:
Multiple platforms for discovery of music including popularity

in Bollywood films, live performances, TV promotion (with
dedicated Punjabi music channels such as 9X Tashan and
ATN MH1 and several GEC channels), and a growing film
market (Punjabi movies crossed INR4360 million in 2013, and
estimated to cross INR6500 million in 2014) 60
Customer segmentation (For example, music for audiences

in Amritsar would be more folk driven vis a vis contemporary
music for consumers in metros or tier I cities such as Delhi or
Chandigarh)
Tapping into overseas potential (popular in markets including

U.K., U.S., Canada and Australia driven by diaspora, concerts,
fusing international elements such as hip-hop, rap, reggae and
disco)
Artiste driven market, with strong promotion focus, growth

in investments in music videos in an interesting trend, the
music industry stars have also crossed over to star in hit films
e.g. Diljit Dosanjh, a singer with several hit albums to his
name starred in Jatt and Juliet, which went on to become a
blockbuster
Social media enabling artistes to engage with their fan base,

several Punjabi music artists have a social media following
rivaling those of Bollywood actors
The regional film music markets such as Marathi and

Punjabi also saw significant growth with increase
in the number of films, and the overall budgets and
production value of films, with multinational and other
large producers getting attracted to this space (e.g.
box office collections of Jatt and Juliet in Punjabi61 and
Duniyadari in Marathi62 have broken all time records). This
has translated to greater investments and growth of the
music industry in these markets as well and attracted
new artists to the space. Going forward too, the growth in
these film industries is expected to drive music industry
growth.
Regional music continues to grow faster than others,
across key markets including Tamil, Telugu, Kannada,
Malayalam, Punjabi, Bengali, Bhojpuri, and Rajasthani.
Key drivers include vibrant performance of regional GEC
and music TV channels, films and web stations. With
phase-III, radio could also increasingly become a platform
for music discovery across regional markets. This has
reflected in music labels strategies to expand in regional
markets. For example Sony has continued its focus on
acquiring music in the Tamil and Punjabi music markets.63
In February 2013, Gaana.com had partnered with the
South Indian Music Companies Association (SIMCA)
60.
61.
62.
63.
Radioandmusic.com, Nov 2013, Punjabi music has a story to share

http://www.punjabicinema.org/highest-grossing-punjabi-movies
Wikipedia, accessed on 10 Feb 2014
Sony contributes to 30 per cent of the regional space: Shridhar Subramanium, Radioandmusic.
com, 12 Feb 2014
64. http://www.medianama.com/2013/02/223-gaana-simca-tie-up/
to acquire music from 79 regional labels.64 Saavn has

also been focusing attention on acquisition of regional
music, and states that it has 75 per cent of all Tamil music
content, 90 per cent of all Telugu music content, 90 per
cent of all Marathi content, and 90 per cent of all Gujarati
content available.65
Regional music markets such as Punjabi and

Marathi have been on an upswing. Growth
in respective movie markets have been a
significant driver, and independent artists have
also been on the rise. Production values and
budgets have also risen in line with the growing
interest.
- Amar Tidke
Senior VP and Content Head, 9X Media Group
International music has seen good growth to reach
10-12 per cent of the music market.66 The top trending
music videos in India on You Tube 2013 included two
international artists (Lady Gaga and Miley Cyrus).67 VEVO,
an international online music video channel, saw an 11 per
cent increase in visitors to reach 2.88 mn in 2013.68 Based
on user likes, the facebook page for Akon has over 17 per
cent fans from India, the late Michael Jackson has ~7 per
cent followers from India while 8-9 per cent of Shakiras
fans on facebook are from India.69
One of the key drivers is the growth in digital channels
as it has been observed that share of revenues of
international music through downloads and streaming is
significantly higher than other genres. Another driver is
the growth in international artist performances in India,
and increased popularity of the EDM genre (Electronic
Dance Music). With increasing cross collaborations
between Indian and International artists, there has also
been increased awareness and Western music influence
through Bollywood. Further, there is greater promotion
and focus from labels, (with Universal Music group
strengthening their focus on the market post EMI merger,
and Sony Music Entertainment India aligning with Warner
Music Group to sell their catalogue in India and other
SAARC countries), and from international music channels,
hence this genre is expected to see continued growth.
Platforms such as live events, social media

channels, streaming and downloading sites play
a major role to influence and bring that change
in the audience preference and taste for music.
International music is one such genre that has
witnessed growth in consumption in the last
year. For instance, the demand for EDM music
has grown spectacularly among young audience
since the past few years.
- Devraj Sanyal
Managing Director, Universal Music Group
South Asia, EMI Music South Asia
65. Dhingana Partners Sony, Universal & Others To Improve Its International & Regional Catalog, via
Factiva, accessed Dec 2013
67. You Tube Rewind 2013 India
68. India Digital Future in Focus 2013, Comscore
69. http://www.thetop10.in/2013/06/top-10-most-popular-celebrities-on-facebook-in-india.html
Devotional and spiritual music continues to be a

significant contributor. Given the cultural affinity for this
genre in India, the industry believes that there could
be continued interest in the genre. In particular, it is
a key driver for physical sales. Recent releases have
seen innovations with styles and new artists including
celebrities, in order to make it relevant to current music
styles and preferences. E.g. Amish Tripathi author of
Siva Trilogy released a soundtrack album based on
his trilogy, with artists like Sonu Nigam and Taufiq
Qureshi contributing.70 Hema Malini also released a
devotional music album as her first, along with Shankar
Mahadevan.71 For example, given the growing popularity
of spiritual music in India, and its continued physical sales,
Universal signed on spiritual leader, Gurmeet Ram Rahim
ji Insaan, who has a strong following in rural India, and
released an album that sold 7.5 million copies in 2013,
mostly in smaller towns and villages.72
The genre tends to see spikes during festivals, and with
launches of compilations and special releases by artists
along with narrations, etc to highlight the spiritual context.
Bollywood music continues to play a dominant

role in the music industry but the non-film
genres like devotional, classical, spiritual etc
have witnessed growth in consumption over
the previous year. Given the varied choices
in genres and upcoming digital platforms, it is
important to reinvent the catalogue to ensure
better utilization.
- Mandar Thakur
Chief Operating Officer, Times Music, A division
of the Times of India Group/BCCL
The comeback of Indie music music (loosely defined

to cover independently produced, non-film music
across genres from rock to jazz to folk to sufi and across
languages) has been much talked about in the last
couple of years. There has been a plethora of new artists
and bands. However the revenue potential still lies in
live events and performances vis a vis music sales.
The mushrooming of music festivals and concerts,
growth in venue infrastructure, online platforms, social
networking sites and TV shows such as Dewarists, Coke
Studio, Sound Trippin, SoundTrek, have all played a role in
promoting interest and widening the fan base.
The growing indie scene, while largely a live

event phenomenon, is playing a strong role in
developing a talent pool for the industry. There
is increasing popularity, and loyalty of bands &
artists in whats till now been largely an event
based experience.
- Arjun Sankalia
Director - International Music and
Publishing,
Sony Music Entertainment, India
OK Listen, a digital platform for independent artists saw

100 per cent month on month growth in 2013, and even
directly released an album by popular group Raghu Dixit
project.73
Sony Musics indie platform Live from the Console and
Universal Music Indias Contrabands, which aims at
discovery and offers a stage for indie artists have both
seen active levels of interest from fans and artists/ bands
alike.
A testament to the popularity of this genre, is the recent
launch of the Pepsi co-branded MTV Indies channel which
is focused on promoting indie music and sub genres
across TV, mobile, web and televised events. The channel
already has more than 500 indie group music videos in its
library across Indian languages.74
These drivers have assisted in creating a thriving music
scene and talent pool, expanding genres of music, and a
lot more is being done on discovery and promotion, yet
there is a lag in realizing revenues; its still not the day job
for many indie artists. While distribution and recording
costs are reducing, enabling indie artists to grow and
interact with fans, greater marketing and promotion is
required, across traditional and new media, to break
through the clutter.
Social media platforms are very important

for new talent to connect with consumers.
Facebook, used widely by the artists, is very
successful in helping musicians to reach out
to their target audience. It also helps music
discovery and is one of the top referrals for
converting music sales on OKListen.
- Vijay Basrur
Founder,
OK Listen
70. en.wikipedia.org/wiki/Amish_Tripathi, accessed on 20 Feb 2014

71. Hema Malinis first music album is all about spirituality, The Times of India, 31 Oct 2013
72. Digital music sales, live events most viable combo for musicians in India Economic Times, Dec
08 2013
73. Discussions with OK Listen Management

74. PepsiCo to pour up to 50 crore into MTV Indies, Economic Times, Feb 7, 2014
166
167
Digital technology and popularity of live

events drive innovation:
Year 2013 witnessed the launch of some striking initiatives
by various stake holders of the music industry.
SOUND BYTE: Innovations in 2013

Red Bull tour Bus: a new pop up venue came to town
Kailesh Kher goes direct to Fan
Beverage brand Red Bull brought its concept of Tour bus in India in
2013. The custom built in bus gets transformed to a live sound stage
featuring bands that can travel across cities. In an estimated three to
four hours, the bus transforms from a typical 36 foot long vehicle to
a custom rock stage fully equipped with a sound system and lights. It
has already made successful appearances across Mumbai, Nashik,
Ahmedabad, Kolkata, Pune and Goa. By end 2013, over 30 bands played
in 14 cities.75
Singer Kailash Kher composed a special song to pay his tribute and
bid adieu to the master blaster Sachin Tendulkar in November 2013.
The song was released through his YouTube channel and the track was
available for free download for a month.78
Platforms for independent artists
Find your freedom contest by Harley Davidson on Facebook

In its fourth season, this contest invited young music artists from
across India to showcase their talent and compete for a place at
the Worlds biggest bike festival, the European Bike Week, 2014 in
Australia.76
PUMA Loves Vinyl - In its third edition, PUMA Loves Vinyl in

association with NH7, organized a free music concert which had
countrys renowned music bands on one Vinyl LP. The event targeted
music and vinyl lovers and also included curated vinyl listening
session for the audience.77
Contrabands A Universal Music Group, Vh1 and Hard Rock

Cafs property provides a platform to discover, promote and nurture
indie artists.
T-Series offering content in cars on the go

T-Series is partnering with UK based Prodigium Mobile and Clarion
car music systems to enable music downloads on car stereos. This
addresses the consumer need for on the go access to a large catalog
for download as well as viewing video content through the T-Series You
Tube channel.79
Biscoot Digital Prepaid Wallet

Launched by Shotformats in October 2013, this app allows users
to access digital content including movies, music, games and apps
through scratch cards which are available at denominations of
INR1000, INR500, INR100, INR50 and so on. It is especially targeted
for the users who do not transact online. The application or the content
cannot be copied to, or shared with, any other device, thus helping
create a stream for content owners to monetize their content better and
curb piracy.80
Karaoke service by Tata Sky

Tata Sky has tied up with Hungama.com to launch a DTH based karaoke
service. The service displays music videos along with lyrics and
features a Sur Meter that rates an individuals singing performance.81
75. Redbull India website

76. Harley Davidson India to help bands Find their
freedom at the Rock Rider Festivals fourth
season, Pitch, 5 August 2013
77. Puma.com and eventfaqs 12 November 2013
78. India Today 12 November, 2013
79. Music on the Move, Soundbox.in, 22 Nov, 2013
80. Shotformats launches offline applications store,
online digital prepaid wallet Business Standard,
23 October 2013
81. Medianama.com 13 February 2014
Growth in music video

There is continued surge in the growth of video streaming
of music videos. Social media websites and YouTube
continue to be the preferred channels for music video
consumption. According to research by Ipsos Global in
2012, 59 per cent of the Indians watched music videos
through social networking sites and 53 per cent shared
the content.
APAC: India and Indonesia are socially connected

Listened to/watched music videos on social
networking sites
56%
Singapore
Hong Kong
54%
32%
29%
South Korea
42%
South Korea
41%
Singapore
48%
Australia
44%
China
52%
China
49%
Indonesia
59%
India
53%
India
69%
Indonesia
Hong Kong
35%
APAC
51%
APAC
31%
Global
52%
Global
Japan
Posted/shared music or music videos on social

networking sites
20%
Australia
28%
Japan
8%
Note: Based on an online survey conducted in April 2012, activities done in the last 30 days
Source: IPSOS global @dvisor, Music Matters 2012
Bollywood movie music is driving the bulk of music

video consumption in social and media sites. One Digital
Entertainment recently launched a live music channel
247, nonstop Punjabi music feed for Speed Records,
with built in chat, reflecting the demand for video based
and interactive content.82 Some of the popular channels
with significant music content include:
Network
T-Series
Uploaded Videos
Views (mn)
Subscribers (mn)
Channels in the Network
49,734
2,382
5.2
13
YRF
4,102
1,065
2.5
38
Tips Music
3,199
592
Ultra Hindi
20,875
541
0.7
19
Sony Music India
1,118
266
Coke Studio @ MTV
4735
111
0.7
Source: YouTube Website as accessed on 01 March 2014
82. www.youtube.com/user/speedrecordss. Accessed on 1 Mar 2014
168
169
In a sign of the times, for the first time globally, Billboard

and Nielsen Soundscan announced that Youtube
streaming data will be factored into their charts and
there was an interesting impact for some videos like
Baauers Harlem Shake which saw low sales, but with a
viral YouTube video set to its music, topped the top 100
at No. 1 for consecutive weeks.83 In line with the trend,
streaming player Saavn is planning to add music videos
and movies to its portfolio. The company is planning to
offer music videos by mid-2014 and full movies within the
next two years84
Opportunity for Indian music in overseas

market, latent potential still waiting to be
tapped
The growth of digital distribution channels, makes it
increasingly possible for music to cross global boundaries.
For example, global top selling charts include artists from
Brazil (Michel Telo), South Korea (Psy and G-Dragon) and
Australia (Gotye). No Indian artist however, has broken
through with a hit on that scale.85
At the same time, Bollywood movies are doing
increasingly well on the international circuit. Bollywood
movies are earning up to 12-15 per cent revenues from
international markets.86 They have gone beyond traditional
expatriate markets such as the US and UK to break into
new markets such as Japan and South Korea. Further, the
popularity often extends beyond the diaspora audience.
For example, closer to home there is a huge untapped
potential for Bollywood music in markets with cultural
affinity including Pakistan, Sri Lanka and in markets
such as Middle East and Africa. Last year, the Middle
East market alone showed a growth of 30 per cent for
overseas film revenues.86 Regional music also has strong
overseas potential, for example Punjabi music has a fan
base across the US, UK, Canada and Australia. Another
driver is increased touring/ live performance overseas by

Indian artistes.
Analysis of streaming music sites indicates that on an
average 15-25 per cent of consumers are global.87 These
are also high potential customers as many are from
economies with greater familiarity and willingness to get
on to subscription based models.
For example, Saavns music license covers over 200
countries and defines itself as a company targeting
worldwide audiences. In March 2012, it released statistics
stating that India accounted for 58 per cent of Saavns
usage, followed by United States (10 per cent), United
Kingdom (3 per cent), Canada (2 per cent), and Singapore
(1 per cent), with the rest of the world contributing to the
remaining 26 per cent of the usage.88
To tap into overseas markets, it has tie ups such as the
one with WesternUnion.com which brings audiences
a show on StarTV USA, simulcast online, called Direct
from Bollywood, with content such as Connecting back
home and shows tied to the local diaspora experience,
staying in the US. During episodes, viewers are presented
promotional codes for Western Union offers redeemable
via the Western Union app or online. The target audience
is South Asia Americans, who, according to a July 2013
Nielsen study, have the highest rate of smartphone
ownership.89
Japan could be an interesting case in point. It has a well
established music market, the second largest globally.90
In 2013, Yash Raj films entered into a partnership with The
Nikkatsu Corporation, a 100 year old Japanese production
and distribution company, to increase the number of Hindi
movies accessible in Japan.91 This was for the release of
films such as EK Tha Tiger, Don2, 3 Idiots, and Jab Tak
Hai Jaan across 9 major cities in Japan including Osaka,
Kyoto, Sapporo and Kobe.91 There is hence increased
familiarity and popularity of Bollywood in new markets
which could be a great entry point for music.
2013 Illustrations of International concerts by Indian artists

Concerts
Artists
Country
Period
Description
Crocus City Hall

Concert
Sonu Nigam
Russia
10-Aug-13
First ever concert in Moscow. Organised by Overseas Bihar

Association.92
DAR Constitution
Hall Concert
Shreya Ghoshal
USA
20-Sep-13
Opening concert of Shreya's US tour with concerts in Washington DC,

Detroit and California.93
Royal Albert Hall

Concert
Sunidhi
Chauhan
UK
27-Sep-13
Last concert of Sunidhi's UK tour, organised by TLC Events and Rock

On Music.94
Temptation
Reloaded Concert
Honey Singh
Malaysia
11-Oct-13
One of the biggest Bollywood concert productions, Temptation

Reloaded sold out in 12 countries.95
Celtic Connections
at Glasgow
Raghu
Dixit, Papon,
Ruhaniyat
Scotland
Jan 16 Feb 2
It is one of the largest annual winter music festivals with 2100 artists
and 300 events. This year, Indian folk music was showcased at the
event.96
83. Baauers Harlem Shake Debuts Atop

Revamped Hot 100 Billboard.com, 20
Feb 2013
84. http://techcircle.vccircle.com/2013/08/06/
saavn-to-offer-music-videos-from-next-yearmovies-in-next-2-years
85. IFPI Digital Music Report 2013, G-Dragon
Enters the Billboard 200 and Places First on
the Billboard World Album Chart, MWave,
21 Sept 2012
87. Alexa.com visitor data, KPMG analysis
88. Saavn Claims To Have 9.3M Users; Mobile,
Country Wise Usage Data (Infographic), 20
Mar 2012, Medianama
89. WesternUnion.com Collaborates with Saavn
to Launch, 19 September 2013, Telugutimes
90. Recording Industry of Japan, RIAJ yearbook
2013
91. Trying to create demand for Indian films in
Japan, 08 March, 2013, Economic Times
92. http://indrus.in/arts/2013/07/23/sonu_nigam_
to_perform_in_moscow_27427.html
93. http://www.americanbazaaronline.
com/2013/08/29/shreya-ghoshal-renderconcerts-three-cities-us/
94. http://bollyspice.com/68711/bollyspice-
review-sunidhi-chauhan-creates-history-royalalbert-hall-spellbinding-concert
95. http://www.indiantelevision.com/
movies/hindi/srk-madhuri-honeysingh-in-malaysia-for-temptationreloaded%E2%80%99-140215
96. http://www.celticconnections.com/Pages/
default.aspx
Concerts
Artists
Country
Period
Description
Indian Ocean
Concert at
California
Indian Ocean
USA
14-Sep-13
Indian fusion rock band Indian Ocean performed at Chabot

College Performing Arts Center. The event was presented
by the Asha for Education group.97
Avial Concert in
Kentucky
Avial
USA
11-Feb-14
Indian alternative rock band Avial performed in Kentucky

this year.98
du World Music
Festival 2013
Soulmate
UAE
28 Mar - 6 Apr
Indian blues rock band Soulmate performed at Dubai du

World Music Festival 2013 99
Remember
Shakti Concert in
Brussels
Shankar
Mahadevan
Brussels,
Belgium
7-Nov-13
40 year celebration of Remember Shakti group organised

by Bozar Music brought together Zakir Hussain, tabla,
Shankar Mahadevan, vocal, U. Srinivas, mandolin, V.
Selvaganesh, kanjira, gahatam, mridangam vs John Mc
Laughlin, guitar100
The Firebrand of
Indian Music
Shankar Ehsaan
Loy
Indonesia
29-Sep-13
Shankar Ehsaan Loy performed in Jakarta in the Firebrand

of Indian Music concert presented by DML Live101
Recent international collaborations:

Aadesh Shrivastava
Akon
Global Sounds Of Peace Album102
28-Jan-13
Salim-Suleiman
Lady Gaga
Born This Way103
13-Apr-13
Priyanka Chopra
Pitbull
Exotic (Single)
Sonu Nigam
DJ Avicii
Indian Levels104
Opportunities for growing alternate revenue

streams; artist management and brandmusic partnerships are key
Globally, the industry continued to grow alternate revenue
streams. Music-brand partnerships are increasingly
coming of age, as brands find strong gains from such
associations. For example, artists have been appointed
as brand ambassadors (e.g Alicia Keys for Blackberry,
Beyonce for Pepsi)106 and there are examples of
innovation in this space such as the Air France app
Music the Sky, launched with BETC Music, incorporating
music, games, and options to win concert and airline
tickets. Rapper Jay Z pre-released an album exclusively
through mobile with Samsung, that went platinum even
before its album release, (despite some technical glitches,
given the unanticipated demand on release) with the
artist preselling a million albums, and with Samsung
Mobile USA seeing a tripling of views to their official
YouTube channel from the previous month, with more
than 51 million video views,107 as well as a significant
growth in social media buzz. Music labels are increasingly
diversifying into new areas including touring, artist
management, and growing synchronisation revenues
in new areas such as placement in gaming, web based
videos, corporate videos, film, internet and television
9 July 2013
2012
advertisements, brand partnerships, applications and

merchandizing.
There are growing examples of brands investing in music
in India, which include Coke Studio at MTV, Pepsi IndiaMTV co branding for the upcoming Indies music channel,
and several liquor and other brands sponsorships for live
events and festivals such as Bacardi NH7 and Mahindra
Blues Festival. The Nescafe coffee advertisement morning
song featured composers Shankar Ehsaan Loy.
97.
98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
http://events.sulekha.com/asha-for-education-presents-indian-ocean-live-concert_eventin_hayward-ca_288932
http://www.songkick.com/concerts/19542029-avial-at-gospel-talent-contest
http://www.songkick.com/festivals/645659-du-world-music/id/15803099-du-world-musicfestival-2013
http://www.europalia.eu/en/article/remember-shakti_127.html
http://www.songkick.com/concerts/17922434-firebrand-of-indian-music-live-in-jakartashankarehsaanloy-at-skeeno-hall
http://zeenews.india.com/entertainment/musicindia/aadesh-shrivastava-launches-album-globalsounds-of-peace-in-mumbai_127204.html
http://rollingstoneindia.com/lady-gaga-collaborates-with-salim-sulaiman/
http://www.digitalspy.co.uk/bollywood/news/a357127/dj-avicii-to-collaborate-with-sonu-nigamon-levels.html
https://www.britishcouncil.org.in/folk-nations/events/
Rethink Music, New Business Models in the Music Industry, 26 April 2013, Berklee College of
Music-Valencia Campus
http://www.hypebot.com/hypebot/2013/07/so-how-did-the-samsung-jay-z-partnership-turn-out.
html
170
171
While India continues to be largely a song driven market,

music artists are growing in recognition and popularity,
thanks to the live events boom and direct to fan platforms
such as You Tube. For example, tapping into the growing
artist management business, Universal in India has set
up an arm (universal Live) that focuses on music talent
and avenues for revenue extension. Universal in India has
signed up deals for many in their talent lineup (e.g Sunidhi
Chauhan, Sonu Nigam, Mohit Chauhan and Shaan) to
make brand anthems, advertising films and jingles.108
Only Much Louder (OML) now manages over 1,000
independent artists.109
It is important to diversify your service

offerings to survive in this ever-demanding and
competitive world. The non-traditional revenue
streams such as merchandising, events, 360
deals for an artist and other in-house branded
properties are expected to be a major source of
revenue for the music companies in the coming
time. At Universal, 50 per cent of our revenue is
generated through such mediums.
- Devraj Sanyal
Managing Director, Universal Music Group
South Asia, EMI Music South Asia
Music related merchandizing in India is still a small

market, with inherent limitations but there are pockets
of growth such as Universals international music linked
Bravado range of merchandize (such as T Shirts, Cell
phone covers, backpacks) that has seen uptake.110
Going forward too, there are likely to be more instances
of 360 degree deals (especially with a newer crop of
artists) that enable music labels to promote artists
across avenues including live shows. As direct consumer
revenues from digital sales still fall behind in the scenario
of declining physical sales, such avenues could bridge
the gap with a win-win association with key brands and
advertisers.
Challenges
Low internet speeds a dampener to uptake
in digital music products and services
India still has a relatively low internet penetration rate
of 17 per cent.111 This is partially due to the higher price
of broadband and mobile data connections and partially
due to lower level of maturity of the internet ecosystem.
Further, the internet infrastructure is not yet ready to
deliver high speed internet. 3 G adoption in 2013 was
slow vis a vis the anticipated growth rate. Both the advent
of 4G and uptake of 3G networks (as telecom operators
are expected to invest more in improving infrastructure,
and with fall in prices of phones and data plans), are
anticipated to improve this scenario from 2014.
The challenge of piracy

Piracy still remains a significant challenge for the music
industry in India. IFPI estimates that approximately 54
per cent of internet users access unlicensed services
in India.112 In particular, there is significant peer-to-peer
music sharing that results in illegal music downloads.
Globally, legislative graduated response processes
and measures to facilitate site blocking are some of the
measures being taken to address this serious issue.
Public education also plays a key role in the current digital
age of enhancing awareness of respecting the artist and
industrys right to royalties.
For example, access to The Pirate Bay, then the biggest
unlicensed service in the Netherlands, was blocked by
two ISPs following a court case, with the others following
in May 2012, following which the sector has seen much
better uptake of legitimate streaming services.112
2012 online users of Spotify vs Pirate Bay in

Netherlands
Unfortunately the digital business does not really

earn money for non film music and with physical
sales vanishing, how does a music label invest
in recording and promoting new talent? So there
needs to be a change in the way digital works or
labels need to reinvent themselves as essentially
concert organizers, for the non film music market
to re-emerge.
- Atul Churamani
Head of content,
OnMobile Global Limited
108.
109.
110.
111.
112.
Source: IFPI Digital Music Report 2013, Comscore
At the same time, we cannot undermine the role of

developing propositions that deliver the right experience
and quality, which can lure customers to go legitimate.
Standing Tall, Soundbox.in, 18 April 2013

http://m.businesstoday.in//story/independent-artist-india-india-music-industry/1/195958.html 9 June, 2013 as accessed on 1 Mar 2014
Discussion with Universal Music Group India Management
IFPI Digital Music Report 2013
For Piracy to be curbed it needs to be dealt with

both pragmatically and firmly. One needs to
treat the symptom as well as deal with crime
and therefore its about dangling the carrot and
wielding the stick at the same time. I believe
much more needs to be done on both scores
and all stakeholders namely content owners,
distribution platforms and the regulator/
government need to play their part and act
in concert. While the former ought to ensure
a great proposition to the consumer which
would mean a great product experience at a
competitive price offering the latter needs to
deal with perpetrators of piracy as stringently as
they would with other crime. Then only will we
replace the ill-legit with the legit.
- Albert Almeida
Hungama Digital Media Entertainment
Continued ambiguity over implementation

of Copyright
A notable development in the Indian music industry
was the amendment to the copyright law that mandates
113. http://www.livemint.com/Consumer/NJi8F3XEI95UEt2jesmILO/Music-firms-may-challengecopyrightlawamendments.html
114. http://entertainment.in.msn.com/bollywood/article.aspx?cp-documentid=250070212
continued royalty payments to lyricists, singers and

composers for a lifelong period (60 years).113 Experts
believe that as a part of this new law, 50 per cent of the
revenues could stay with the music label, 25 per cent
with the producer, while the remaining 25 per cent of the
revenues may be equally split between the lyricist and the
composer as royalty on any new music contracts.114 This
new law created ripples amongst industry stakeholders.
We have below, a guest column by Shantanu Surpure,
Managing Attorney of Sand Hill Counsel, that discusses
this in more detail.
Copyright Law in India - Status and

regulatory isseues
Shantanu Surpure
Managing Attorney, Sand Hill Counsel
Act: The first Copyright Act in India was
passed in 1914 (an extension of the British
Copyright Act, 1911). The Copyright Act, 1957
(the Act) has been amended five times since then.
Amendment: The recent amendments to the Act, the
Copyright (Amendment) Act, 2012 (the Amended Act)
have drawn a lot of public attention due to the inclusion of
progressive provisions such as right to royalty, statutory
licensing and exceptions for persons with disabilities.
172
173
Provisions: The Amended Act clearly states that film performers as

well as the authors of certain underlying works used in cinematograph
films and sound recordings have a (largely non-assignable) right to
continuing royalties (for the commercial use of their performances) for
the use of their works or live performances in certain circumstances
regardless of the fact that they may have assigned the copyright in
those works or the fact that they may not be entitled to the enjoyment
of a performers right (sections 18, 19(8), (9),(10) and 38(A)). This
specifically ensures the rights of the authors of the literary or
musical work in cinematograph film or sound recording to receive
royalties, which would be shared on an equal basis with the assignee
of copyright, for the use of the work in any form other than for
communication to the public along with the cinematograph film. It has
been clearly indicated that such a right to receive royalties can neither
be assigned or waived through contract or otherwise.
The Amended Act has been well received by the broadcasting sector,
specifically in the light of the amendments pertaining to the statutory
license for broadcasting of literary and musical works and sound
recording (section 31 D of the Amended Act). This provision permits any
broadcasting organization to communicate to the public any literary or
musical work and sound recording which has already been published
by way of a broadcast or performance on a prior notice of five days, as
determined by the new rules, and subject to the payment of royalties to
be determined by the copyright board.
Piracy: Despite the provisions of the Amended Act, the problem of
piracy of copyrighted products in India continues. Piracy problems
and lack of a paying audience led to the closure of several companies:
i) the Indian music streaming startup Dhingana had to close after
raising funds from international investors; and ii) Flyte, Flipkarts music
download service which also shut down after a year. It is estimated that
music piracy costs Indian media and entertainment industry an annual
loss of about US$ 4 billion which has also been noted internationally.
US Trade Representatives have identified Nehru Place,
Gaffar Market in New Delhi along with Manish Market, Lamington

Road in Mumbai as notorious markets in global piracy and violation of
intellectual property rights.
The Amended Act has introduced measures to fight piracy such
as making circumvention of technological protection a punishable
offence (65A) and removal of rights management information and its
distribution without authorization illegal (65B).
Conclusion: Although artists have been pleased by the Amended
Act, Indian music companies and movie producers have challenged the
new provisions of the Amended Act as being unconstitutional. One of
the prime concerns of the music companies has been with statutory
licensing for broadcasting of literary works, musical works and sound
recordings. Their argument is that the Amended Act ensures royalties
for authors but it restricts revenues for filmmakers and authors by
imposing statutory licensing to the broadcasting sector.
In the international context, it is being deliberated in the US whether
copyright holders should be allowed to decide without legal constraint
to whom they will license their content and on what terms. In Pandora
Media, Inc. v. American Society of Composers, Authors & Publishers,
an antitrust case currently pending in federal court in New York, the
streaming company has sued ASCAP (American Society of Composers,
Authors and Publishers) and some of the major record labels for
withdrawing their content from the ASCAP joint licensing venture,
thus forcing individualized negotiations. This is a leading-edge dispute
which may help address the question of whether and if so to what
extent owners of copyrighted digital content are permitted to refuse
to deal with competing distribution channels on dramatically different
commercial terms.
Shantanu was assisted in this article by Nisha Mallik, Senior Associate at Sand Hill Counsel
Unless otherwise noted, all information included in this column/ article was provided by the authors
Shantanu Surpure and Nisha Mallik. The views and opinions expressed herein are those of the
authors and do not necessarily represent the views and opinions of KPMG in India
High acquisition costs of film music

The Copyright Act has undergone profound
changes but lacks a Preamble that states
the purpose, reason and legal justification of
copyright. Instead of clarifying the underlying
theory of copyright, several controversial
court decisions have led to the present chaos.
What we see today is a struggle for supremacy
between various concepts of copyright.
The impact of the Amendments will largely
depend on three factors: an authoritative
Copyright Board, an efficient, non-partisan
IPRS and, last but not least, a judiciary with a
historical perspective on copyright. Till date, the
report card on all three is zero.
- Achille Forler
Managing Director,
Universal Music Publishing Ltd.

116. After Tips and Venus, T- Series abstains from purchasing music rights, 23 Oct 2013, Mumbai
Mirror
Acquisition costs of film music, Bollywood music in

particular, remain high, in the range of INR70-100 million
for A+ films with superstar casts, and INR40-60 million
for the next tier of films.115 It is increasingly challenging
to maintain profitability at these levels. For example,
T Series is reported to have paid INR70 million for the
music of Shah Rukh Khans Chennai Express, INR120
million for Salman Khans movies, Kick and Mental, INR50
million for Hrithik Roshans Krrish3 and another Rs 50
million for Ranbir Kapoors Besharam.116
This is one of the key reasons that we are seeing
examples of both forward and backward integration in the
industry. For example, T Series, Venus and Tips through
film production, could get the music rights for a fraction
of the cost mentioned above, and would have greater
control over the same. Conversely, film production labels
like UTV, Eros, Rajshri and Yash Raj Films have created
their own music labels.
The cost of content acquisition is high due to

rapidly increasing rates of intellectual property.
Currently the cost of acquiring a music rights for
a big budget movie has increased by nearly 50
per cent and double in some big ticket films with
A list actors over the last year. Given the lifecycle
of music album which is about 3-4 years, the
challenge is around cost recovery/ break-even
as it takes approximately 3-5 years to cover the
cost incurred on acquisition and promotion of a
particular album.
- Vinod Bhanushali
President, Marketing, Media and Publishing (TV)
Super Cassettes Industry Ltd
Payment mechanism
With less than 2 per cent penetration of credit cards in
India,117 absence of easy payment systems has been an
obstacle to growth. Most transactions for music would
be in the sub INR100 category. Integration with telecom
billing becomes one alternative. There are some startups
in India which are looking at alternate payment models,
which are offline or SMS based, ad integrated with telco
billing developing robust and easy mechanisms for the
same could be key.
Digital music currently faces challenges

around many issues like availability (not many
digital stores or streaming sites), awareness
(that digital content is affordable and easily
accessible) and payment (lack of smooth
payment mechanisms for purchase of digital
goods). The Indian consumer is slowly exhibiting
the propensity to spend on digital music since
the affordability & convenience of legitimate
music is being preferred to the pain of looking for
pirated content.
- Vijay Basrur
Founder, OK Listen
Critical Success Factors

Getting value of music from a digital
consumer
There is an increased danger, of the digital generation
getting habituated to free music in an ecosystem
propped up by advertisers, telecom operators and device
manufacturers. The challenge then, is how to shift to a
more subscription based ecosystem.
117. http://www.paymentsjournal.com/Content/Featured_Stories/16443/
When given unlimited access to millions of songs at a

click, experience has now become the product for most
consumers. This then calls for different capabilities from
the music industry with a focus on convenience to
customers, social media integration, and simplicity and
flexibility across the lifecycle. In particular, the leanback
customer, (looking for a more passive experience in an
environment with multiple gadgets and media competing
for attention), needs to be addressed through curated
content, and recommendations based on usage patterns
and intuitive/current themes.
This also requires the right investments in background
systems for content digitization and meta tags, and for
gathering intelligence and building that into product
design. Digital platforms enable discovery of the long tail
of content, but it requires proper tagging and intelligent
search for building up rich meta data. For example,
the Indian consumer searches for songs by actor not
just artist; further there is high potential for phonetic
misspelling when searching for songs not in English, this
had to be borne in mind by online music services here. In
the physical sales context, this is also an area requiring
special attention, where retail employee knowledge and
capability to source and recommend, based on user
profile and requests is increasingly difficult in large format
stores. The model below offers an illustration of the key
requirements across the customer lifecycle.
174
2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
175
Critical success factors across the customer lifecycle
Discover
Finding the music I

want
Ease of payment

Ease of activation
of services

Collaborations to
build depth and
relevance of
repertoire
Simple design for

minimal clicks
Proper meta
tagging
Intelligent search
systems
Flexible/ hybrid
package options
On the go

Access across
devices
Segmented pricing
Security of payment

Value added
services
Linkage with events
Collectibles
Content curation
Recommendations
Develop and
organizing library
Repeat purchase

Playlists
Loyalty programs
Upgrading through
value packs
Ongoing
communication
Cloud Integration
Reviews

Customer service
Connecting with
those with similar
musical
preferences

Integration with
social networks
Repeat purchase
Store
Access to artists
Offer sampling
opportunities
Recommendations
based on music
preferences and
usage based on
intelligent
technology
Talking about
experiences and
discoveries,
recommendations
Amplified
experience
Leanback
experience
Alerts
Share
Making customized
offers
Discovering music
I didnt know I
wanted

Listen/experience
Purchase
Development of
online and offline
communities and fan
base
Product bundling
including RBT,
downloads, and
other services
Seasonal or popular
themes
Grow alternate
discovery channels
Content curation
Customer segmentation
The consumers of today are looking for
leanback experiences, which focus on creative
curation, intelligent technology to offer
relevant recommendations, and value added
experiences. For revenues to shift from an OEM
or ad supported model towards a greater uptake
of consumer paid subscription services, these
features will be key.
- Shridhar Subramaniam
President,India and Middle East,
Sony Music Entertainment
India is a fragmented market, with several categories of

consumers with distinct needs and affordability, ranging
from an early adopter urban smartphone user to feature
phone user looking for bite sized packages. Defining
target segments and adapting products and services
becomes key. For example, while youth is a significant
driver especially for digital channels, globally, there has
also been widespread adoption of streaming services in
the age group 35-44, with 28 per cent penetration (vis
a vis 38 per cent for the age group 16-24) and given the
purchasing power of this segment across digital channels
and live events, it is increasingly, a segment of focus.118
Collaborations
The future of the sector lies to a large extent in how
players across the value chain, collaborate within and
outside the industry to design, build and offer products
and services to the consumer. For example, as discussed
earlier, bundling with devices is becoming one key
area requiring partnerships. Secondly, collaboration to
aggregate and offer a wider and relevant catalogue is
another area. Working outside the industry, with brands,
with live event organizers, with device and platform
owners, can be key to ensuring wider reach for artists.
Discovery of new talent and Marketing

A&R (Artist and Repertoire) is a function integral to the
growth of the ecosystem, and reduced dependence on
film music. Talent shows and TV music based shows
and contests have been a feeder for discovery. Social
networks also produce viral hits or indicators of artists
fan base, that mostly reduce risks associated with these
decisions. Yet a lot more is required for discovery of talent
at a grassroot level; exploring new sounds, and then
taking the right risks to invest in new faces. With the rising
acquisition costs of films, music labels are increasingly
looking at non film avenues, and are hence investing more
in discovering independent talent. The 1990s saw the
birth of a whole crop of Indipop stars, from Baba Sehgal
to Alisha Chinai, backed by music labels and snazzy music
videos.119 With growth in avenues for monetizing talent
across live events and digital streams, the time may be
ripe again for investments in talent across production,
video and gig support, promotion and marketing.
Top 10 sources of discovering new music in India

Radio programme
At the same time, traditional media such as television and

radio are key sources for discovery of new music in India.
Investments in promotion through these channels is still
critical. For example, the growth of the Punjabi film and
non film music segment is also fuelled by the viewership
garnered across multiple Punjabi music TV channels. 121
47%
Social networking sites
46%
38%
Told by friends/family
Radio advertisement
41%
TV advertisement
46%
Internet advertisement
41%
Movie theme music
40%
42%
Magazines/newspapers
Official websites of artists/bands
31%
Note: Based on an online survey conducted in April 2012

Source: Ipsos Global @dvisor: Music Matters 2012
The challenge today is marketing of music. The

mass media does not support any music outside
of film music so all other categories have to
find cost effective ways of reaching out to the
consumer. Indie music has started attracting
more and more sponsorship for concerts and
festivals. One hopes that this will translate
over time into the media as well so that there is
a robust market segment for all categories of
music.
With respect to marketing, social media is a powerful tool

for referral based marketing. Independent and new artists
also rely on social media buzz for album and live event
promotion. The youth today is very active across social
media, and likes to engage closely with friends, fellow
fans, and artists, to chat about music trends, share and
like music preferences that might reflect his tastes and
profile.
For example, A R Rahman, Sonu Nigam, Shreya Ghoshal,
Asha Bhosle and Lata Mangeshkar are among the top
Indian celebrities on Facebook and Twitter w.r.t. fan
following.120
42%
TV programme
- Atul Churamani
Head of Content,
OnMobile Global Limited
Conclusion
The music sector, is a key contributor to the
entertainment economy and could in turn, be a driver
for growth in areas such as VAS and movie promotion.
Digital disruptive changes have brought the sector to the
cusp of change. While declining physical sales and CRBT
revenues have shrunk revenues; the digital streams open
up new possibilities. Royalties from broadcast, and out
of home events is also assessed to grow at a rapid pace
going forward.
The industrys success is underpinned on its ability to
grow the subscription segment, offering customers
ease of access and services they seek at flexible price
points. Those sites that can engage with the customer to
enhance stickiness, could stand out better in the clutter.
These are still early days for the digital models with
time and datamining, could come better understanding of
consumers, workable business models, and technology
that can be leveraged for the same.
119. en.wikipedia.org/wiki/Indian_pop, accessed on 01 Mar 2014

120. http://www.indiancelebsontwitter.com/# and https://www.facebook.com/celebrities.face2face/
posts/431943796890688
121. Industry discussion by KPMG in India
176
08
Animation,VFX and post-production
Creating magic!
Overview
Size of Animation, VFX and post-production industry in India
Segments
(Amounts in INR billion)
2009
2010
2011
2012
2013
CAGR 2009-2013
Animation services
5.5
6.2
7.1
7.6
8.0
9.8%
5.3%
Animation production
3.7
3.9
4.2
4.5
4.7
6.2%
4.4%
VFX
3.1
4.5
6.2
7.7
9.3
31.6%
20.8%
Post-production
7.8
9.1
13.5
15.5
17.7
22.7%
14.0%
20.1
23.7
31.0
35.3
39.7
18.5%
12.4%
Total
Growth in 2013
Animation revenues include revenues from work

outsourced to India (animation services) and from locally
created animation movies and animation in commercials
(animation production).
2013 saw glimpses of what the Indian animation and VFX

industry has sought to achieve - the release of probably
the most expensive Indian animated movie Mahabharat
costing around INR500 million1 which also saw the
highest opening day collection for an animated movie in
India2, introduction of policies by a few state governments
to boost the sector and a lot of players venturing into
multiple revenue streams with the advent of digitalisation,
including 3D conversion, restoration of old classics and
the use of IMAX technology. The impetus of visual effects
was not only restricted to films; it also found way into
some big budget serials and television commercials.
These positive developments were partially negated
when the underlying struggle in the industry came to the
forefront with the fall of big names like Rhythm and Hues
and Digital Domain, retrenchment by some big players
like Crest, as also the inability of the animated movies to
recover costs at the box office. The performance of the
animation industry was more flat, whereas VFX and Postproduction grew.
The animation entertainment service models lie along

different parts of the value chain. Depending upon the
service model that a player adopts, he can be present
across the value chain or in certain specific parts of it.
Players also adopt multiple service models, for e.g. the
same player may operate on service delivery model and
co-production model, varying from one deal to the other.
Size of Animation, VFX and Post production

industry in India
Animation service models
20.0
CAGR-22.7%
18.0
16.0
INR Billion
14.0
12.0
10.0
VFX revenues include revenues generated from works/

effects/segments/shots etc. created for producers of
domestic and international movies, television serials,
advertisements and other mediums.
Animation service models
Service model
Description
Integrated
Studio - Own
Content
Units that enable production and development

of all aspects of an animated product, from
conceptualisation to post-production stage.
Full ownership of content, share in collections,
royalty for all licensing and merchandising.
Integrated
Studio - Offshore
Facility
Indian entities provide services for activities

outsourced to them.
Co-Production
Animation companies in India are moving

up the value chain, from providing piecemeal outsourcing services to exploring the
co-production model. Typically, the Indian
studios bring the manpower and infrastructure
to develop the animated content and the
international producer will finance the
marketing, distribution, etc.
CAGR-31.6%
CAGR-9.8%
8.0
6.0
CAGR-6.2%
4.0
2.0
Animation
services
2009
Animation
production
VFX
2010
2011
2012
Overall CAGR 2009-2013 : 18.5%
01. www.funrahi.com
02. www.animation-boss.com
Postproduction
2013
178
179
The Indian animation industry has come of

age and has certainly gone up the value chain.
There has been a clear shift from the traditional
outsourcing model to that of creating and
owning Intellectual Property. The industry is now
also churning out content from start to finish
that is from concept/creative to the final product.
EVP and Business Head Kids Cluster
Viacom18 Media Pvt Ltd
Indian Animation at the cross

roads
The year saw fewer number of Indian animation movies
release in theatres as compared to the previous year.
Also, the box office collections were nowhere near
recovering the production cost incurred for making these
movies.
Indian animated movies in 2012-13 with production budgets and box

office collections
2013 movies
Studio
Mahabharat
Budget
Box office
collection - net3
2012 movies
Studio
Pen India Pvt.

Ltd
5004
14
Delhi Safari
Chotta Bheem and

the Throne of Bali
Green Gold
Animation
1245
43
Main Krishna
Hoon
J.C.Film
Vision
NA
The year also saw a large number of start-ups spring in

the country; however, many of the big animation studios
reduced their staff to half or less than half. A few studios
also called it quits in the current year and the industry
professionals estimate that while new ones did come up,
their numbers were not necessarily enough to replace the
ones that shut down.6
03. www.funrahi.com
04. www.beekays.com
05. www.animationxpress.com
in INR millions
Budget4
Box office
collection - net3
Krayon Pictures and

People Tree Films
250
15
Chotta Bheem
Green Gold
Animation
40
33
Sons of Ram
Amar Chitra Katha
50
Krishna and
Kans
Reliance
mediaworks
NA
Arjun - The
Warrior Prince
UTV motion pictures
300
15
180
Key trends
Local IP creation has picked up momentum in the
industry, thanks to a few success stories like the
Chhota Bheem series. The established studios are also
attempting to source local content for e.g., Nickelodeon,
inspired by the success of the mythological serial Little
Krishna, is looking to expand its local content library.
Growth in original local animation content is expected to
get a further boost from Indian comics players who are
looking to monetise their content libraries by creating
market presence in TV programs. A key driver for this
is the rising number of hand-held devices like tablets,
smartphones and consoles that have opened avenues
for interactive content, and maturity in the relationship
between the telecom companies and content developers.
Today, India has the third largest TV households

globally. The world of childrens entertainment
in India has been experiencing nothing short
of a historic breakthrough. After decades
of unparalleled dominance by International
characters, it is the Indian animated characters
like Chhota Bheem, Roll no.21, Little Krishna,
Mighty Raju, Motu Patlu etc. which are
dominating the Indian Television space. But its
a different story for Indian Animation movies at
the Bollywood box office. Most local animated
movies have failed to make an impact. What
India needs is consistent efforts in this space.
- Rajiv Chilaka
Founder & Managing Director,
Green Gold Animation Pvt. Ltd.
Increased use of animation in TV advertisements

The Indian TV advertisement industry size is expected
to increase from INR136 billion in 2013 to INR253 billion
in 2017 at a CAGR of 13 per cent.7 As the advertising
industry grows, it is expected that the share of animation
driven advertisements will also grow. Animated
advertisements usually strike a better chord with the
target group of children and young adults, it can be easily
understood and related to by audiences, irrespective
of language and cultural barriers. Some of the recent
examples in India are the boy and girl character in the
FANTA commercial, Candyman from Crme Lacto and
Chinta Mani from the ICICI prudential commercial.
Moreover, animation commercials often result in
significant cost savings compared to advertisements
with celebrities, making another point for their increased
usage.
07. KPMG 2013 FICCI report, The power of a billion
Intellectual Property (IP) creation on the rise
181
Demand for skilled workforce

There is a significant demand for highly skilled and trained
workforce that merges technical and artistic capabilities
in the field of animation. Drawing skills, design and layout,
observation of live-characters, animation techniques,
understanding cartoons and caricatures, creating different
moods and feelings in characters are some of the skills
which can be acquired either through a formal training
animation program from reputed institutes or by carefully
following the trends and techniques used abroad. The
industry has opened up a plethora of opportunities for
skilful aspirants. One can work as a character designer,
compositor, digital link and paint artist, key frame
animator, 3D modeler, layout artist, etc. Not only are there
animation jobs available in the motion picture industry,
there are several other fields that they are valued in
as well-cartoon production, websites and video game
manufacturers all use animation artists. There is also
the opportunity of freelance work particularly for web
animation.
The content processing industry is extremely

talent dependent. Thereby, hiring needs to be
an anticipative strategy, not a reactive or even
proactive one.
- Naresh Jhangiani
President - Operations, Creative and Media
Services
Reliance MediaWorks
State Governments and other associations

initiatives for the sector
Animation, Visual Effects, Gaming and Comics
(AVGC) policy:
Karnataka became the first Indian state in early 2012
to unveil a policy for the AVGC sector, recognising its
growth potential. The policys salient features include
focussing on bridging the demand-supply gap for
people in the sector, attracting global companies
in the field, capturing a larger share of outsourced
international AVGC work and facilitating a legal
framework for IP creation and protection. In addition,
the policy envisages an environment that promotes
growth of indigenous digital content, education and
entertainment for masses, and the setting up of a
center of excellence with state-of-the-art facilities.
The policy acts as a catalyst for the industry and for
developing AVGC parks similar to a special economic
zone model.8
08. www.bangaloreitbt.in
09. abstract of Andhra Pradesh GAME policy 2014-2018, www.aponline.gov.in
10. www.agafa.in
11. www.gcma.tv
State Funding and Assistance8

Amount to be raised: INR540 million
Finishing academy and incubation center: INR100 million (State
Government contribution 20 per cent)
Post production and DI facility: INR60 million (State Government
contribution 20 per cent)
IP creation: INR10 million
Digitisation of 10 art schools: INR0.1 million for each school
Gaming, Animation, Media and Entertainment
(GAME) city:
Andhra Pradesh is also giving the gaming and
animation segment a new thrust, seeking to build a
GAME City in Hyderabad on the lines of the Dubai
Media City and Media City U.K. in Manchester. It
is expected to have several IT offices, academic
institutions, an incubation centre and plug-and-play
built-up office space for entrepreneurs. With a view to
promote local animation films and content, efforts are
under way not only to create a venture capital funding
mechanism and extend seed capital assistance but
also to provide fiscal incentives and subsidies on
production cost, lease rental, stamp duty, electricity,
staff cost and reimbursement of Input Value Added
Tax (VAT)/Sales tax/Central Sales Tax/Andhra Pradesh
General Sales Tax for products/films/ services made
in Andhra Pradesh. The companies would also get
recruitment assistance for employing a minimum of
100 employees within a year of beginning commercial
operations. 9
Annual Graphics and Animation Film Awards
(AGAFA):
AGAFA is a new initiative of the Society for Animation
in Delhi (SAID), instituted in 2013 with the objective
of encouraging quality and creative production of
Animation and related arts. The awards are given on the
results of an annual competition in the field of thematic
Graphic Design, Digital Painting and Animation with a
purpose. The Jury is independent and selected from
among eminent arts personalities in these fields.10
Key challenges
Lack of government initiative in India versus
benefits provided by other countries
Overseas animation markets such as Malaysia, China
and Philippines are turning out to be more attractive
destinations than India for outsourcing work due to the
advantage of the many Government driven grants and
incentives.
For example, the Malaysian Government provides various
incentives such as:11
Content funding support which includes support for
documentaries and films production (local or coproductions).
Incentives and financing through cash rebates,
entertainment tax rebates and creation of an

investment arm to spur Malaysias creative industry via
strategic and innovative funding in the form of equity or
debt investments.
Market Export Support In order to assist SMEs
to expand to overseas market, the Government of

Malaysia through the Market Development Grant
(MDG) provides grants to companies to partially
defray the high cost of export promotion.
On similar lines, the Chinese government has announced

preferential VAT and Business Tax (BT) policies beginning
retrospectively on January 1, 2013 where animation
enterprises are subjected to 17 per cent VAT rate for
the domestic sale of self developed and manufactured
animation software. The export of animation software
is VAT exempted at 3 per cent; BT rate applies to
animation enterprises providing certain services.12 The
Indian animation industry could benefit considerably
from Government support through measures such as
reservation of a certain number of hours of domestically
produced content on channels, tax benefits and treaties.
India needs to position itself as a key Asian

co-production partner in the AVGC sector in
the global market. This will need a few key
policies to be implemented on a war footing,
such as Co-production treaties, Strong Indian
presence at global content markets, Kids Media
Development Fund and Kids Public Service
Broadcaster (DD-Kids). These overdue policy
initiatives will also boost export earnings,
generate employment and revitalise
the industry.
- Munjal Shroff
Director and CEO,
Graphiti Multimedia Private Limited
Lack of universal storylines

The lack of universally accepted storytelling techniques
is further making Indian animation a distant dream. Apart
from improving quality of animated films, filmmakers
need to create characters that are loved by the Indian
audiences, moving probably beyond mythological
characters. However, the challenge with the industry is
the divide between the storyteller, producer and studio.
Indian filmmakers and audiences still may need to
mature to become a serious market. India is far behind
international standards on the ideation side. Though
Indian filmmakers are just beginning to produce content
that is finding wide favour with Indian audiences, it is
12. www.chinabriefing.com
still at a very nascent stage in writing stories that can be

understood by the entire world; however it is at par with
international standards in production. The content which
is consumed by the western world and India are very
different, the world does not identify with Indian content
as the stories are complex and the story telling also is
complex, even though the biggest market for animation
is based in India. On the other hand, the stories told by
the American studios are simple and universal. Probably
use of characters that generation next relate to could help
drive more Indian audiences to the theatres.
IP Protection
Rampant piracy within the distribution channel eats
into a major share of revenues for the producers and
distributors. This along with slack IP laws and weak
enforcement serves as a deterrent to animation players in
India to produce their own IP.
AVGC dilemma
Ashish S K,
Co-Chairman,
FICCI AVGC Forum
Animation in India began about 1520 years ago with the
production of a commercial 2D cell animation. Since then, India
has evolved into one of the most coveted global animation
destinations. To ensure sustainable growth, animation education
and artistic education on the whole should be restructured in India
since this is a creative industry. Scaling up and nurturing talent
has so far been an uphill task as most of the career options in
India are targeted towards science and commerce streams. Even
today we do not have artistic and performing arts as subjects in
school curricula. Students and parents find it difficult to choose
artistic, creative and performing arts as mainstream career options
because of the lack of adequate opportunities in these fields. Even
the universities at large found animation difficult to understand
and they have always tried to place it among engineering and
technical subjects whereas its true place is in the arts, storytelling
and film-making divisions. Animation, visual effects, gaming and
comics (AVGC) as an industry has the potential to provide valuable
career options to talented Indian students; the need of the hour is
to alter basic education to make it more artist-friendly and design
and promote professional courses in animation and gaming by
universities.
Even from a policy perspective, AVGC as a sector has been placed
under the IT and ITeS. Hence, India has been positioned as one
of the most sought after service providers in animation, gaming
and visual effects categories by some of the major American
and European studios. Moreover, this sector has been covered
182
183
under STPI and continues to enjoy benefits under the scheme for
outsourced work. In the present environment, original IP creation
has not received any support either from policymakers or the
industry per say in terms of global marketing and distribution.
Indias animation content buying price points by broadcasters are
also not encouraging enough to create original IP. It is important
to understand that original IP creation would lend a distinct
character to Indias animation industry and put India on the globe
besides stabilising the animation ecosystem. We need to sincerely
address the challenges around building sustainability and workable
business models with respect to original IP creation in the country
to make the Indian content relevant for the global audience.
The lack of co-production treaties with countries that produce
animation also serves a roadblock in promoting Indian content and
the overall animation industry globally. The signing of the IndoCanadian audio-visual co-production treaty on 24 February 2014
may mark the beginning of a promising era.
To add to the challenge in a live action-dominated country,
animation content has a default position in India as kids genre,
which hampers the building of distribution systems and revenue
streams. Moreover, India does not have TAM rating for audience
below 4 years, which is a popular pre-school genre worldwide. If
we have an opportunity to include this category, we can explore
a huge opportunity of cutting edge TV shows, building preschool
character brands, licensing and merchandise.
Despite these challenges, we have been able to make significant
progress in the past decade by providing university programs and
creating a vocational skills assessment and certification process
by establishing national occupational standards (NOS) under
FICCI Media and Entertainment Skills Council, which is under the
National Skills Development Council.
Though a majority of revenue today comes from outsourcing
services in the AVGC sector, we have witnessed significant growth
in the original IP in the past four years, especially through television
broadcasting and mobile gaming. While feature films and console
gaming are yet to mature, proper marketing and distribution
support and strong national and state-level policies would go a long
way toward ensuring growth of the Indian animation industry in
outsourcing and original content creation domains
Disclaimer : Unless otherwise noted, all information included in this column/ article was provided by the author Ashish S K. The views and opinions expressed herein are those of the authors and do
not necessarily represent the views and opinions of KPMG in India.
Looking ahead
Segments
(Amounts in INR billion)
2013
2014P
2015P
2016P
2017P
2018P
Animation services
8.0
8.4
9.1
9.8
10.7
11.6
7.8%
Animation production
4.7
4.9
5.1
5.4
5.8
6.3
6.0%
12.7
13.3
14.2
15.2
16.5
17.9
7.1%
Total
CAGR% 2013 2018P
Animation industry future projections

Animation, unlike the IT industry, invloves creativity and
technology; it has seen three growth cycles in India.
Initially, low-end volume work was what was largely
coming to India. Subsequently, many companies came
into play, thereby creating employment opportunities and
demand for manpower in this space resulting in advent of
the animation education and churning out of students.
The animation industry is entering into its third phase

where some of the animation companies are also sharing
the risk by owning IP as against a pure services play.
The new era of digital content economy is a

reality, our policies have to be in sync with the
evolving needs and culture of this digital ecosystem. Original Intellectual property creation in
Animation, Gaming & Comics in India is proving
to be the stabilising factor and consolidating the
industry way forward. Emerging modules and
understanding of focused Asian Co-production,
alongside the other European & North American
co-productions in Animation is a welcome sign
and an eye opener for most of the stake holders
in the Animation, Gaming & Comics sector.
We have to work hard towards bringing coproductions in this space with Latin American,
African, Caribbean, Middle Eastern & Australian
sub continents also.
Industry professionals believe that if the industry has

to grow in a broad based manner, some changes are
imperative:
Promotion of domestic content in television, cinema
theatres etc. coupled with specific incentives
Incentives (tax breaks, subsidies, etc.) for companies
in the outsourced services space and also for those

involved in local IP creation using local talent
Setting-up of quality training institutions.
Conclusion
With India losing quality work to Kuala Lumpur, Beijing
and Manila and with animation experts blaming it on poor
funding and the policy framework, animation companies
may have to design different structures to deal with
the challenges. With no dedicated governing body, the
animation and gaming industry continues to be under
the generic National Association for the Software and
Services Companies (NASSCOM). There is a lot of
potential in this industry but a few fundamental problems
need to be resolved first, which can go a long way in
propelling the industry to the next level.
- Ashish S K
Co-Chairman,
FICCI Animation, VFX, Gaming
and Comics Forum.
VFX and post production - rise

of a new horizon in the Indian
media industry
Overview
The Indian animation industry is on a growth

trajectory given not just the talent pool and
lower costs but also the treasure trove of
Indian mythology and folklore that can be retold
through a new age medium. We also have
to graduate from providing slave labour for
international animation product to producing our
own content, and that would drive the future of
the animation industry.
Even as we are gearing up to open an animation
studio in Bangalore by the end of this calendar
year, setting up a gaming studio in Hyderabad is
also a possibility given the distinct advantages it
offers including a large pool of talent.
International TV channels that now have a
stronghold in the Indian market have started
realising the need for domestic content to reach
out to their audience and the demand for local
content is growing rapidly vis-a-vis international
programming.
- Ketan Mehta
Managing Director,
Maya Digital Studios
In recent years, the Indian media and entertainment

industry has seen a rapid increase in the use of visual
effects (VFX) in mediums such as films, television
and advertisement. The domestic market is seeing
bigger budgets for VFX in films, television shows and
advertisements in order to provide an enhanced visual
experience to viewers.
Filmmakers are increasingly relying on visual

effects and stereo 3D for creating compelling
movie experiences. In India, as well as overseas,
we see this trend catching up as it is hugely box
office friendly too. The action genre and super
hero obsession are leading to visual effect heavy
projects increasingly coming our way. The time
may not be far when we may not have to shoot
our films anymore. Visual effects and stereo 3D
may take care of storytelling completely.
- Namit Malhotra
Founder, Chairman and CEO,
Prime Focus World
184
185
2013 was a good year for the VFX industry as almost all
top grossers had substantial use of VFX. In Dhoom 3 for
example, the digital characters for vehicles and twowheelers using computer generated imagery (CGI) were
created for various high-octane action scenes to look real,
which also included a 3D water jet ski and fast-paced bike
riding shots. The movie also became the first Indian movie
which was digitally re-mastered into the image and sound
quality of the IMAX Experience with proprietary IMAX
DMR (Digital Re-mastering) technology.13
Krrish 3 is also a testimony to the increasing use of VFX
in Bollywood where a large number of shots in the film
utilised VFX such as the entire plane sequence capturing
Marine Drive and Wankhede Stadium in Mumbai.
With never seen before effects, KRRISH 3 has

become the benchmark Indian film for the VFX
Industry. Its one of the most challenging &
complex Indian VFX project executed in the
Indian cinema.
- Keitan Yadav
Red Chilies VFX
13. www.imax.com
The use of VFX is not restricted to big budget action

movies like Dhoom 3 or Krrish 3, even low-budget and
non-action oriented movies owe a lot to the magic of
VFX. For example, the shot in Aashiqui 2 where actor
Shraddha Kapoor is shown facing a roaring crowd at a
concert, was shot in an empty stadium and similarly, the
bridge scene in Gori Tere Pyaar Mein shows a simulated
gently flowing river.
Top 10 Bollywood grossers (domestic collection net) of 2013 and 2012 with
number of VFX shots
2013 movies
Box office
collection
INRmillion14
VFX partner
Number of
VFX shots
(approx)
2012 movies
Box office
collection
INRmillion14
VFX partner
Number of
VFX shots
(approx)
Dhoom 3
2,803
Tata Elxsi15
1,500
Ek Tha Tiger
1,980
Tata Elxsi15
Krrish 3
2,405
Red Chillies VFX19
3,500
Dabangg 2
1,585
Prime Focus15
950
Chennai Express
2,267
Reliance Mediaworks16
1,300
Rowdy Rathore
1,310
Reliance
Mediaworks16
600
Yeh Jawaani Hai

Deewani
1,900
Prime Focus17
Agneepath
1,230
Pixion Studios15
Goliyon Ki Raasleela
Ram-Leela
1,100
Reliance Mediaworks17
Jab Tak Hai Jaan
1,207
Red Chillies
NA
Bhaag Milkha Bhaag
1,035
Pixion Studios15
160
Barfi
1,200
Pixion Studios15
500
Grand Masti
1,025
Pixion Studios15
500
Housefull 2
1,140
Prime Focus18
237
Race 2
1,020
NA
NA
Son of Sardar
1,050
Pixion Studios15
3,800
1,020
Pixion Studios15
600
930
Pixion Studios15
400
300
750 plus
Aashiqui 2
854
Prime Focus15
107
Bol Bachchan
Special Chabbis
700
Imaging Labs
NA
Talaash (14)
14. box office collection from www.koimoi.com;

17. Industry discussion conducted by KPMG in India

18. www.primafocusgroup.com
19. www.entertainment.oneindia.in
1,062
1,600
Add to this the train sequence of Chennai Express which

was mainly shot in the studio with green screen, the
train pulling into a station in early morning, to transitions
such as the day turning into evening on the mobile phone
screen, the train entering into a tunnel in the evening with
the headlight of the train transforming into a beautiful full
moon revealing the landscape at night etc. were master
shots created using visual effects. Similarly for Goliyon Ki
Raasleela Ram-Leela, the studio ensured with the help of
grading technique that the scenes had the right textures
and tones throughout with specific contrast and colour
set-ups.
187
The year saw an interesting trend wherein the ratio

comparison of VFX shots between small as well as bigbudget movies was comparable. Most movies today tend
to use VFX in some form or the other.
The VFX in Bollywood movies is generally applied in the
post-production phase and except for a few like RA.One
or Krrish 3, it is not a design element in the narrative
process. In contrast to this, the movies produced in the
South (of India), and VFX is a creative tool for innovative
storytelling as evident from blockbusters such as
Kadal, Vishwaroopam, Eega (Makkhi), Enthiran and
Magadheera. In fact, S S Rajamoulis under production
Baahubali is touted as one of the most expensive films
ever made in India with never before heard budget for
its visual effects, probably in excess of INR800 - 850
million.20 It is being said that the team is going to create
almost two hours of environment for the film. The VFX
team will create, extend and enhance the fictional
kingdoms, forts and palaces in all their glory, apart from
creating beautiful landscapes, several realistic action
sequences including those involving animals, for this
period extravaganza.
Emerging trends
2D to 3D conversions
In Hollywood, re-release of old classics after conversion
into 3D formats is on the rise for example, 2013 saw
the release of Jurrasic Park 3D which opened at fourth
place in North America, with USD18.6 million from 2,771
locations, while IMAX showings accounted for over USD
6 million, with the 32 per cent being the highest IMAX
share ever for a nationwide release.21 The international
release had its most successful weekend in the last week
of August, when it managed to top overseas box office
collections with a USD 28.8 million debut in China.22 The
reissue earned USD 45.4 million internationally,23 making
it the 17th film to reach USD 1 billion and ranks as the
13th highest-grossing film of all time.24 This suggests a
strong business case for 3D re-releases of old hits, given
the relatively lower conversion costs (<USD10 million-20
million).
With filmmakers becoming more aware about

stereo 3D techniques to achieve their creative
vision, visual entertainment services have
emerged as an entire game-changing facet of
film production. The whole experience of visual
entertainment is enhanced with increased
demand for content and growing comfort of
production houses for conversion of 2D to 3D
format.
- Merzin Tavaria
Co-founder and Chief Creative Director,
Prime Focus World
20. www.indianexpress.com and www.bollywoodhungama.com

21. Subers, Ray (April 6, 2013). Weekend Report: Audiences Thrill to Evil Dead, Jurassic Park 3D. Box
Office Mojo. Retrieved May 6, 2013
22. Clintock, Pamela (August 25, 2013). Global Box Office: Jurassic Park 3D Clobbers the
Competition, Huge in China. The Hollywood Reporter. Retrieved August 26, 2013
23. www.boxofficemojo.com
24. White, James (23 August 2013) Jurassic Park Joins The Billion Dollar Club. Empire. Retrieved
August 26, 2013.
188
Maya Digital Studios successfully converted the biggest

blockbuster of its time Sholay, from 2D to Stereoscopic
3D. It may be pertinent to note that not only was the
movie 38 years old, the negatives had faded and had
to be restored, it required colour correction, several
portions had to be painted and touched-up using various
softwares and many manual processes. It was only after
this restoration process that the film was ready for 3D
conversion. The task on hand of 250 artists involved in
the conversion process can be imagined from the fact
that one second of filmed footage is 24 frames, and the
length of the film is 198 minutes. So essentially, the 2D to
3D conversion of Sholay meant conversion of 285,120
frames converted to transform Sholay to 3D. This was
followed by creation of a depth map, which indicates what
is near the screen and what is far away. With the help of
the depth map, a 3D environment was created, and a
third dimension was given to the image. This combined
with other processes like adding of colours, placement of
objects in frame along with creative insights made for an
interactive movie watching experience.25
However, re-release of Hindi films in 3D format does not
seem to have picked well in the Indian market - Sholay
3D with a cost of conversion and re-release budget of
approximately INR220 million26 could collect only INR110
million27 at the box office.
Digitalisation and Restoration of old Indian films

for re-release
Some years back, the process of digitalisation of and
restoration of old hindi movie classics commenced with
Mughal-e-Azam, followed by Hum Dono and Jaane
Bhi Do Yaaro. 2013 saw release of yet another classic,
Chashme Buddoor. Hindi cinema is clearly riding a
nostalgia wave by re-releasing old classics like Raja
Harischandra, Guide, Do Bigha Zameen, Pyaasa,
Kagaz Ke Phool and Agneepath. These films are either
being coloured (if they were black and white to begin
with) or having their quality (sound, picture) significantly
enhanced.
For many old gems, this trend is a matter of life after
celluloid death. Sai Paranjpyes Chashme Buddoor is a
good example: a specially remastered edition released
30 years after it first hit screens. Reliance MediaWorks
(RMW), a studio based in Mumbai, took less than a
month to complete the work. At the commencement of
restoration work, the entire film was in a bad condition almost 90 per cent of the film contained heavy stains on
it with extremely high level of green stains and fungus
along with other errors like dirt, scratches, unsteadiness,
flicker, warps, gate hair and static dirt.
26. Indo-Asian news service December 27 2013
27. www.koimoi.com
The India Story: 2D to 3D conversion for classics

begins with most iconic film - Sholay
189
It took a team of 80 artists with extensive frame-by-frame

manual restoration to get the original look and feel. The
files were then converted to 2K resolution for further
processing including pre grading, picture restoration,
image enhancement and final color grading. Audio was
simultaneously restored and converted to pseudo 5.1
sound from mono tracks. The restored image and audio
files were then processed for making a Digital Cinema
Print as per the DCI specifications.28
Steps involved in digitalisation and restoration process28
Step 1 - Finding the source material of the film and
sound negatives, as well as inter-negatives. Films may
also be on tapes, cassettes, etc.
Step 2 - Ultra Cleaning Process, where this source is
carefully cleaned
Step 3 - The material is scanned
Step 4 - Defects are carefully identified and corrected
Step 5 - Digital and manual restoration process begins
simultaneously, done frame by frame
Step 6 - Colour correction and grading. At this stage the
cinematographer and director of the film get involved
in the grading process. They also check the restored
film for changes. Sound restoration for the film is done
separately.
Once both processes are completed, the picture and
sound are matched and transferred to different formats.
The process of restoring original negatives often opens
avenues for monetisation of these films. While some
argue that the tepid box office response to such digital
re-releases militates against the trend, some people
believe that restoration is vital to preserving old classics,
considering that they are cultural artifacts. And for most
film buffs, a re-release is seen as a chance for younger
generations to share a special experience on the big
screen, with older folk looking to relive fond memories.
Many classics have high recall value (which is largely why
some get remade) and elicit immediate reactions, always
a marketers delight.
Co-production deals in India on the rise

Co-production has emerged as a popular strategy for
studios in many countries as it provides flexibility while
working with smaller studios and brings in new and fresh
creativity from other countries. As co-production has
increased, VFX studios in India have become popular
partners of studios in Europe, Japan, and North America.
Improved capability and perception of the Indian studios
is encouraging for the outsourcing pie of the VFX services
in India. Ethyrea Films(California) has successfully
concluded negotiations and announced a USD9 million
dollar visual effects co-production deal with early this
year.29
30. www.articles.timesofindia.indiatimes.com
The per centage increase in Indias share

of work (for international VFX) should be
attributed to the transparency of the operational
processes. The immediate derivative of this
transparency is that the artist finally gets
acknowledged for the good work he is been
producing, this then automatically leads to
increase in volume of work.
- Naresh Malik
President - Creative & Media Services,
Reliance Media Works
Use of VFX in television

Use of VFX in Indian television serials goes back to 1980s
where the technology was used in mythological serials
such as Ramanand Sagars Ramayan and B R Chopras
Mahabharat. Today, VFX is becoming an integral part
of storytelling on television. Increased used of VFX in
television content, whether it is in continuing serials
like Devon Ke Dev...Mahadev or the new ones like
Mahabharat, 24, The Adventures of Hatim, etc., is a
paradigm shift as Television as a medium is getting bigger
and better. For example, Devon Ke Dev...Mahadev (DKD)
has a separate graphic department comprising 90 people
which is a large number for a television serial.30
The Studio working on a short format show for the first

time made use of the Baselight color grading system
to achieve the look and mood detail that a show of this
nature, required.
Use of VFX in advertisements
Vertex Volt, a Mumbai based studio, has delivered 1500

VFX shots32 for the serial The Adventures of Hatim there are some interesting VFX shots that have been
undertaken for this serial for creation of Ashquar City,
Zarghaams Den and the Yaman City, to create lava,
fire, smoke and destroyed structures, multiplication
of 3D dragons for Zarghaams evil army force, etc. The
show uses many computer graphic elements such as
rotoscopy, matte paintings, varied set extensions, 3D
props and characters, composition and colour correction
for the adventurous feel of the episodes.32
Contrary to popular belief that VFX on television is
restricted to mythological / period dramas, increasingly,
certain fiction shows with higher budgets such as 24,
have used VFX for pre and post production. This show
used a dedicated team of 30 specialists from Prime
Focus.33
31. www.indiatellytalkies.com
With the plethora of channels available at the flip of a

button, one of the key challenge for advertisers is to hold
the attention span of potential customers and prevent
them from changing the channel when an advertisement
appears. A key weapon therefore, is VFX, which not only
enhances the content but also adds fun and interest,
elements necessary to hold the viewers attention. Visual
effects also help shape a viewers feelings about the
product or service in the ad. For example, if an ad shows
the giant bug retreating and finally dying after being
sprayed with a bug spray, the viewer might feel confident
that the product can get rid of any insect.
Similarly, the newly launched TV series Mahabharat is

being made on a budget of INR1,000 million31 - a number
generally associated only with budget of movies in India.
Increasing use of VFX in television commercials (TVCs)

is mainly attributable to factors such as accessibility,
affordability and quality of output. Advertising creative can
be created on many media real life (shoot), animation,
computer graphics and claymation. In a high budget
advertisement, there is a scope to allocate a larger pie to
packaging (VFX, animation). Today, technology is no longer
a means to save costs as companies are willing to pay
more to get the right look and feel for an advertisement;
this could mean using a combination of film stars,
animation characters and VFX.34
The road ahead
Post-production
Total
2013
9.3
17.7
27.0
2014P
11.3
20.4
31.7
2015P
14.0
23.6
37.6
2016P
17.2
27.6
44.8
2017P
21.5
32.3
53.8
2018P
26.8
38.1
64.9
CAGR% 2013-18P
23.6%
16.6%
19.2%
Challenges
It is often misunderstood that visual effects is a part of
post-production when it is actually a part of filmmaking
in general. VFX has always been a margin challenged
business and intense competition is now adding to
industry pressure and is inhibiting investment. Also,
there is a feeling that Indian companies need to work on
design, quality and execution. In the future, wider use of
technological innovations such as performance capture
and cloud computing could be differentiators and such
tools could help tell bigger stories, as well as keep costs
under control.
VFX and Post-production future projections

40.0
CAGR 19.2%
35.0
What the future holds
30.0
Most believe that VFX will only see growth in the Indian
film industry. One of the main reasons for increasing
use of VFX in Indian films is that writers, producers and
directors are increasingly touching upon new genres and
stories which are impossible to make without extensive
involvement of VFX professionals. With the help of a
talent pool, at a fraction of Hollywood budgets, Indian
films are bound to use it extensively. What can also help
is that studios have commenced getting involved in the
project right from the script stage. This has enabled
studios to use some of the most cutting edge and pathbreaking VFX technology for e.g. recent projects such
as Dhoom 3, Bhaag Milkha Bhaag and Ek Tha Tiger.
Despite the endless possibilities ahead, the rise of VFX
is a noteworthy change in Hindi cinema. But going by the
experts in the field, it requires the combined mastery of
mind and art and should be treated like just another step
in the assembly line of filmmaking.
25.0
It is a good time for Indian VFX industry.

Individual ticket sizes of VFX budgets are going
up to as high as INR25 million to INR40 million,
and even regional films are going big on VFX.
- Krishna Shetty
President - Post Production Services,
(Amounts in INRbillion)
VFX
INR Billion
191
20.0
15.0
10.0
5.0
2013
2014P
VFX
2015P
2016P
2017P
2018P
Post production
The VFX business in India has great long

term potential due to a robust Indian
Film and Television Industry as well as
international work for hire. The animation
business in India on the other hand is
struggling with government supported
foreign studios and will not survive without
broadcaster support for local IP.
- Gaurav Jain
Producer,
Illusion Interactive
India VFX participates in a slew of award winning global projects

Is it cheaper to do VFX than to shoot scenes on location with a
Biren Ghose
Country Head,
Technicolor India
VFX is one of those content creation technologies that is doing India
proud on the global entertainment and advertising communications
stage. The country now needs to build scale and this will only
become a reality when there is a much higher management of and
investment into human and infrastructure resources. Apart from
this, the Indian CG industry needs to build tools to ensure disruptive
technology to produce quality even where content creation budgets
are not as extravagant as big Hollywood levels. The next step is
to develop a keen art and development aesthetic which makes it
possible to take care of the technology pipelines that will still give
the Director the same ability but at a lower cost! This will herald a
new paradigm of opportunities for production houses to cater to a
market and turbo power regional and domestic content to achieve
contemporary big picture polish!
There is, beyond a doubt, a real and swift transformation
happening in content packaging, as digital production becomes
an even greater part of the creation and distribution dynamic.
This revolution is seen in motion pictures; broadcasting; computer
gaming and even in mobile/tablet devices which are all part of the
evolving media paradigm.
The pain point for a film maker has always been the difficulty in
portraying that which is beyond the scope of the camera many
devices were employed to make this happen [this was the special
effects world as it existed in a rapidly vanishing era]. Cinema
history has legions of materials deployed by way of clever effects,
stunts and moving backdrops among other antics used to make the
production larger than life or resemble reality as the case may be.
The advent of motion graphics, computer graphics and animation,
now makes all this possible through 3D image manipulation by
artists and technicians [VFX].
The past 15 years have been spent in translating the idea of
VFX [Visual Effects] to the fine art and science it is today a
mature industry - with a prime position in content creation
with methodologies, routines, tools and protocols that are well
established as the 21st century way to making films, commercials,
video games and even TV productions. The world majors use this
to mount the biggest movies and after the payment to top stars the
largest line item in a movie budget is the VFX expenditure. Given
its strategic importance many movie makers from George Lucas to
Sony Pictures all started to create in house units so that they could
harness the power of CG and technology innovation on a proprietary
basis but today this has become an item they prefer to partner
with specialist organizations such as MPC; Framestore; Digital
Domain; etc.
In India this is becoming a major new wave influencing
productions to leverage the benefits of CG in producing the Dhoom
3 type larger than life titles.
Some of the questions around VFX that often gets asked helps to
understand the basics, and so I am addressing them them mostly in
the context of the India industry.
camera?
Working high quality VFX is both time consuming and
expensive. It must be employed where a new world/
environment has to be created [movies like Aliens, Prometheus,
etc could not be created without it!]; where one has to create
environments lakes, rivers, canyons, mountains with snow
caps; etc that may not be easy to access at the right time or
because it needed a period look of a time bygone or in the
future; - climatic changes thunder, hail, snow, storms, etc;
creatures including those imaginary, extinct and real and
those that cannot be made to act to a script! Look at Gravity
- the 2014 Oscar VFX winner it truly was a game changing
movie - you truly are in the zero gravity outer space environment
and if you were at an IMAX with the stereo glasses no movie
experience in recent time comes close! In most of these it is
pointless to make direct cost comparisons. However, in say the
climax of a Bond movie where things are exploding all around,
it seems wasteful or environmentally destructive to do that
in a real environment. Skyfall being a case in point! [Here, the
climactic Scotland sequences are the handy work of specialist
CG artists and technicians!].
Given the expenses in hardware, software and skills
development is this industry viable for the local industry?
Making VFX for Indian cinema is indeed a challenge the

efforts may be very similar to international productions in
number of man days/ number of shots, etc. however, the
budgets are relatively low. The software /hardware and
infrastructure costs for rendering and storage etc are all very
expensive. Service providers in such economies as India are
therefore every challenged to survive on voluminous work
that has low or no margins. We are speaking to a few state
governments to create some common facilities to bring the
cost down as a shared resource. Karnataka has been the most
proactive in its response to this technology and have issues a
policy to help develop education and facilities.
Do expensive VFX driven movies increase the budget and
therefore the risk to the filmmaker/studio/producer?
VFX driven movies are still in an early experimental stage and

Raa.One and Krish 3 and ROBOT etc. are all evidence of the 1st
attempts at integrating this technology seamlessly in the Indian
context. Producers have to learn how to mount big budget
movies, powered by plenty of VFX shots, so that it achieves
the desired outcome. Their goal is to make a movie of epic
proportions / impossible action and that larger than life
ambition is where the deployment of CG is an imperative to give
it a disruptive edge.
Many acclaimed Indian filmmakers are experimenting with the
VFX syndrome and beginning to learn of how to harness and
integrate its potential. I believe that Indian cinema, over the
next 5 years, will have figured the VFX syndrome as it starts to
scale heights of bigger and bigger productions in the quest for
the INR1000 crore blockbusters.
This will inevitably happen in this space history has shown Only with bigger risks will there be a bigger return!
Do the audiences see the value created? If they do, does that
mean the VFX is poor or overdone?
192
193
VFX in Indian movies tends to be overdone and too in your

face. They will, in time, become more seamlessly integrated
into the story. Its a paradox as to whether showing off this
magic is going to create more audience support or vice versa.
It is the Directors job to decide on the intensity and aesthetic
at which to execute a particular shot! The new breed of VFX
Supervisors will assist in making this a tasteful and seamless
process. The new emerging VFX Supervisor, a position that has
become very much a key part of todays Hollywood films, will
come into their own in India as well.
Is VFX just a simple labour-intensive task or is there any
creativity involved?
As a testimony to great work being done in India I will quote

the achievements of the MPC Bangalore team for their work in
2013:
VFX Oscar 2014 nomination for Disneys The Lone Ranger; VES
shortlists for Superman Man of Steel, Brad Pitts World War
Zee besides the Oscar nominee title. In advertising the Shots
Awards-2013; Best Overall VFX Company, Europe & US, Ciclope
International Festival of Craft; theBritish Arrows Craft Awards
Gold, Best VFX and CGI - 2013 London International Awards Silver - Visual Effects;; for Assassins Creed IV Black Flag trailer
won the British Arrows Craft Awards Silver, Best VFX 2013;
for Dell ThomasAICP Winner, Visual Effects 2013
Besides MPC, there are studios such as Prime Focus; Prasad
Labs; Visual Computing Labs [Tata]; Future Works; Makuta
[Hyderabad]; Firefly Studios; Anibrain; Red Chillies; MRT
Studios and many others are blazing new trails. This is serious
recognition of the world-class quality Indian VFX studios aspire
to and are beginning to garner.
The CG pipeline for VFX has many different components that
need to harmonize into a final product. Depending on the
project - from the development phase to the production of an
animatic to the management of how the live action shot is
taken to the references for the artistic process all this sets
the objective after which the process of creating CG assets Modeling, Surfacing, Rigging and then the animation, lighting,
compositing are all a part and parcel of the VFX studios world
and expertise. These disciplines are similar in skills but have
different dynamics and detail with fully animated production
processes. India can also do a lot to develop next gen tools and
technologies in the trade.
Does VFX work with other elements of the film making process
to devise something which the end customer values? Is it like

3D stereo, just a gimmick? Is the jury on this still out?
The modalities of VFX and how it can be used need to be

understood by all members of the team. Writers; visualizers,
storyboard artists, directors, cinematographers, must all
understand what VFX will do so they seamlessly integrate
this in their scenario building; planning the shoot [angles, etc]
and use VFX as a tool for enhancement rather than just for
environment filling, replication of crowds, corrections; etc. It is
certain to be more than a computer aided gimmick!
2014 and 2015 are going to be defining years as the industry
strives to grow exponentially and this will be driven by the
rush of projects from other countries that will come to India to
leverage our talent and technology savvy. This will develop
the base of talent, which will then work for many local
projects as the domestic market matures in understanding
both the potential and the cost required to properly deploy this
technology.
VFX is becoming an active agent in the fermentation of ideas
towards making bigger box office hits for high-end and bigbudget content. India will need to leverage all the experience
of the India VFX 1.0 phase and collectively take this to another
level of performance and efficiency.
Meanwhile, we will see an explosion of domestic talent and
studios, migrating teams that have experience in the VFX
production industry, having worked on international projects,
who will begin to figure out how to support the domestic film
and TV market, and the high end advertising films
This sector will experience the highest growth rate of any
vertical in the M&E industry. I predict the next 5 years to have
over 30% CAGR at the least!
[Note: The views in this article are personal and not official comments by Technicolor or
MPC]
provided by the author Biren Ghose. The views and opinions expressed herein are those
of the authors and do not necessarily represent the views and opinions of KPMG in India.
Future is Present!
Venkatesh Roddam
CEO,
Reliance MediaWorks
The future is present, and so is the past, in the current present of
technology-enabled visual effects. Technology continues to be
fascinating as it always keeps evolving. Who wouldve thought
a couple of decades ago that words like anachronistic would
disappear from production lexicons worldwide only thanks to digital
visual effects technology, but would simultaneously continue to
haunt the R&D executives of VFX studios.
The fascinating aspect of visual effects and technology, as the
world knows, is that the creation of nothing is impossible today,
and the only impediment toward creating something would
perhaps be ones imagination, if at all. But then, there is also the
other side that worries the businessmen among the artists in this
highly evolved techno-creative space that a renowned studio
that flourished for decades, files for bankruptcy and receives the
highest recognition in terms of awards at the same time. It is a
reality that we as business heads need to deal with while juggling
between the boundaries of creativity and business. Creativity needs
no yardstick for measurement, but bottom-lines come with myriad
analytical tools. There is bench time, optimisation of resources,
anticipative human resource allocation strategy, constant upgrade
of technology, balancing of skill-sets and many more yardsticks,
solutions, optimisation tools, and yet, there are issues that continue
to fundamentally persist.
Diversification is the key, as they say. Even from a business
standpoint, I dont think any other industry offers such a variety of
backward, forward and lateral integration, all at the same time. This
is perhaps why, purely from a business perspective, the industry
continues to be fascinating. The ability to create and creatively
distinguish oneself then becomes the cherry on the cake.
That the Indian visual effects industry is slated to grow at a CAGR
of 2025 percent and double its size almost every five years is an
encouraging fact. What is contributing to this growth and what will
continue to foster the growth from a domestic market perspective
is mainly the awareness of the possibilities that visual effects can
open up, cinematically. An average Indian film these days has about
400 VFX shots. Whats great is that VFX is now seen as an integral
function of the production process. Then there are super-hero films.
Even romantic comedies these days have an intensive 7501,000
VFX shots, which contributes significantly to the increase in the
individual ticket sizes for orders. What this also creates in terms
of business opportunity is the trend that a number of small-budget
films are also getting more aggressive on the VFX front, as they too
move up in the pecking order. To add to that, there is increase in
visual technology work in the proliferating regional cinema, which
is also driving the growth.
Aside from bringing down the costs, one of the key advantages that
we bring in through visual effects is convenience. Lets assume that
we need to recreate the 1980s Mumbai, with all the fancy props
of that era, or a peacock sitting atop a tree branch, or beautify the
frames of Gujarat. Its no effort. VFX can get that done with the click
of a few buttons. Given the number of logistical issues that one
faces to create an era or use animals in a film shoot, many would
just drop the idea if it werent for VFX. So, that past, this future
all is the present. And that is where we belong, continue to grow
and are eventually headed towards, all at the same time. That is the
beauty of technology.
Technology is such a great enabler that it not only helps us preserve
important incidents in human history, but also empowers the
professionals of this industry to create new chapters, to write
history. Like for example, at RMW, we have restored and digitised
Neil Armstrongs walk on the moon. Speaking closer home about
the Indian industry, I think life came full circle for Indian cinema in a
strange sort of way, when Raja Harishchandra, the film that marked
the birth of Indian cinema, was reborn through digitisation in its and
the Indian cinemas 100th year. ,
The pace of the technologys evolution has thankfully increased the
pace of our thought processes. Transnational business operations
or even the realms of space are a click away. When I watch a film
like Gravity in IMAX 3D, I am spellbound. Back home, India has a
Krrish 3. It is indeed encouraging to know that visual treats like
these are being created in our industry.
The third dimension in the viewing experience is already a driver
globally. While our arch rival China has 80 percent of its cinema
screens already 3D capable, we in India are still catching up. And
then there are the 3D TVs and other audio-visual devices that are
adding market numbers; not on the global levels in India as of now,
but we should be there soon. That opens up yet another avenue
for serving visual delights for players like us. R&D cannot be a
support function for an industry like ours. It has to be a key business
function.
From realism in depiction, there is now a trend in presenting realism
in fictional experience that all visual techniques, including 3D,
are trying to provide. One such area is that of the high-frame-rate
technology, from the traditional 24 FPS to a whopping 60 FPS.
Through this technique, pace, clarity, detailing and experience, etc.,
will be enhanced to delight the viewers. The possibilities are truly
endless as one continues with the collective might of the technocreative geniuses.
What will continue to stay a problem for India, however, are budget
constraints. Today, the ticket-size VFX work for an one-hour episode
of a Hollywood series like Black Sails is way bigger than the entire
VFX budget of a mainstream VFX-driven Indian film. So, while we
evolve here, we evolve further over there and it is important that on
the quality front at least, the Indian market catches up soon with
its delivery potential. That will re-write the growth story of this
business, and the CAGR numbers will then shoot through the roofs.
Disclaimer : Unless otherwise noted, all information included in this column/ article was
provided by the author Venkatesh Roddam. The views and opinions expressed herein are those
of the authors and do not necessarily represent the views and opinions of KPMG in India.
194
09
Out of Home
Displaying resilience
Outlook for the year
Revenue split by various formats in 2009
Year
OOH industry size

(INR billion)
2007
14.0
2008
16.1
2009
13.7
2010
16.5
2011
17.8
2012
18.2
2013
19.3
CAGR (2007-2013)
5.5%
2013 saw muted growth for the Indian outdoor advertising

industry (OOH), primarily due to the tough economic
environment. Brand owners spent approximately
INR19.3 billion in 2013 on Out-of-home advertising which
approximates 5 per cent of advertisement spends.01
Though metros continue to garner a larger share of
the OOH pie (in excess of 50 per cent), in line with the
trend witnessed in the last couple of years, the Tier II
and III cities continued to outperform the larger metros.
A large number of campaigns are being done in Tier II
and Tier III cities, but since the cost of media is lower,
the percentage contribution is lower. Regionally, north
and west contributed upwards of 60 percent of the
advertisement spend in OOH.02
22%
Airports and other transit
media (buses and trains)
16%
Street furniture
2%
Others
60%
Bilboards
26%
17%
Street furniture
2%
Others
55%
Bilboards
Key Sectors
The healthy trend of 2012 which saw a mix of contribution
from varied sectors, continued in 2013. The top
contributing sectors were Real estate, BFSI, Media and
events and Personal accessories. While Real estate and
BFSI were the leading sectors, Auto underperformed.
Government spends also saw an increase in 2013 as
compared to 2012.
OOH Formats
Billboards continue as the medium of choice
approximately 55 per cent of the OOH advertisers
used this format in 2013. Industry players saw some
corrections in pricing and/or renegotiation of inventory
sites. The transit OOH business in India, especially in
airports, continued to experience accelerated growth.
With various airport modernization and new metro
projects in the pipeline, this format is expected to
continue to outpace other segments. Performance of
new channels such as bus shelters, LED billboards and
street furniture continued to be below expectation. This
segment continues to be plagued by poor infrastructure,
absence of a secure environment (fear of theft or
vandalism) and limited customisation of content.
30%
17%
Street furniture

3%
Others
50%
Bilboards
196
197
33%
10%
Street furniture
2%
Others
While the industry saw steps towards consolidation or

unified approach, as was witnessed for example in some
pockets in the North and in Pune, there is likely still a lot of
fragmentation. Industry players believe that advertisers
may want a package of assets spread over the geography
and this can be effectively achieved only through
consolidation.
55%
Bilboards
10%
Street furniture
Other factors like lack of clarity on regulations, absence

of a uniform system of measurement and resistance to
audit to improve transparency, could continue to hamper
growth.
Looking ahead
34%
this space and this may be a positive sign; for example,

an agency has been capturing data across 30 cities on a
monthly basis with geocoded and time stamped videos,
processed by a proprietary software with an intent to
improve visibility duration measurement.
1%
Others
55%
Bilboards
Key challenges
As the industry by definition is outdoor and is mostly
spread across the city and country, all large geographies
will likely have their own challenges. Developed markets
have some advantages by having uniform sizes, formats
and have been quicker to adopt new technology.
However, that could be an opportunity as well, since India
can leapfrog and adapt newer technologies and provide a
robust platform for planners.
Reliable research is key for the OOH industry, but the
measurement system has not taken off as intended.
Industry experts believe that this is primarily due to lack
of adequate sponsorship for the program. There are some
measurement agencies which are gaining traction in
It is expected that amongst other factors, Transit media

can propel the industry to the next level. Airports,
highways, corridors and metro rail projects are typically
controlled environments that could encourage OOH
adoption and help solve at least one major part of the
measurement conundrum: effective circulation or
opportunity to see. Digital OOH distributed across
place-based networks in venues including cafes, bars,
restaurants and public spaces, typically featuring screens,
kiosks, jukeboxes, etc. is a story waiting to happen and
this struggling medium appears to be slowly creeping
back. Once this unfolds, it is expected that the OOH
industry will move up the value chain and will no longer be
seen as a mere residual category.
An improved ecosystem and measurement effectiveness
can provide the necessary impetus that the industry
desperately seeks.
Projected size of OOH industry

Year
OOH industry size

(INR billion)
2013
19.3
2014P
21.2
2015P
23.1
2016P
25.2
2017P
27.5
2018P
30.0
CAGR (2013-2018P)
9.2%
Projected size of OOH industry

Thanks to national elections, OOH will see
another year of decent growth. However,
slippage in share of all media spends continues
to be of grave concern. The impending IOAA &
AAAI mou for regulating transactions between
agencies and media in the OOH space will
definitely create a very positive business
environment. Regulations continue to have
an overall negative effect. Theres an ADEX in
the offing as well as measurements. So lets
see a positive scenario appears to be on the
cards. The digital mess was created because of
3 issues :
35.0
30.0
CAGR 2013-2018P - 9.2%
25.0
20.0
15.0
10.0
5.0
2013
2014P
2015P
2016P
2017P
2018P
OOH is difficult to miss. You can switch the

channel, turn the page or surf away. A campaign
with a good reach and an optimal frequency will
demonstrate its effectiveness. The audience
may miss the message on a particular day or at
a particular location, but will get exposed to it
on another day or in a different part of the city.
There has been a lot of interest in DOOH and
investments will continue to happen in the metro
cities. OOH is gearing to have measurement that
is not a sample but an effective census of the
audience and the powerful data will encourage
Advertisers to invest more in the medium.
- Harjaap Singh Mann
Managing Director,
Proof of Performance Data Services Pvt Ltd
lack of appreciation of extent to which

creative affected and lack of investment in
content creation
wifi connectivity that could create networks
with live feed or at least live controls and,
finally
abundant alternatives at hugely competitive
prices.
Now with all 3 of these factors coming under
control of new entrepreneurs and those who
managed to survive the worst of times, the future
appears to be much more assured especially in
spaces like malls, large stores, transit locations.
- Indrajit Sen
Executive Director - IOAA,
Promoter-Director - Media, Analytics and
Design P Limited
198
10
Advertising
Paused for growth
Advertising market outlook:

2013
We still have a lot of headroom for growth across

all media channels in India, be it TV, Print, Radio,
Cinema, Out of Home or Digital. Apart from
mobile, many interesting technology solutions
are emerging in the broadcast space. This can
fuel the growth of advertising amongst SMEs
and local brands.
The advertising industry faced a rough year in 2012 and

there were expectations for a better performance in 2013.
But the continued economic slowdown, depreciation
of the rupee and low GDP growth resulted in persistent
negative sentiment leading to a muted growth rate for the
industry in 2013.
The advertising spends were relatively healthy in the
first half of the year backed by strong spending from
the FMCG sector, state assembly elections and better
performance of IPL6 compared to the last two seasons.
Post July, there was a sudden slowdown due to
depreciation of rupee and other macro-economic factors
due to which advertisers held back their money1. A minor
blip was observed towards the end of the year due to
elections and rupee getting stabilised with the industry
reporting an overall growth rate of 10.9 per cent2.
2014 is expected to be a promising year due to the
impending national elections and high expectations from
sectors like FMCG, automobile (multiple new launches
planned) and financial services, with an overall growth of
the advertising market projected at 13.1 per cent2.
- CVL Srinivas
CEO,
GroupM, South Asia
In 2013, the total advertising spend from various sectors

across all media was estimated at INR362.5 billion2.
Among various media, Print and Television continued to
be the primary media platforms, claiming nearly 82 per
cent of total revenue and could continue to be the most
dominant media for the next five years. The buzzword this
year however was Digital (medium) whose advertising
revenue grew by 38.7 per cent occupying a market share
of 8.3 per cent and the trend is expected to continue in
20142.
Advertising revenue (INR billion)

Overall industry size
(INR billion) (For
Calendar Years)
2008
2009
2010
2011
2012
2013
Growth in
2013 over
2012
2014p
2015p
2016p
2017p
2018p
CAGR
(2013-2018)
TV
82.0
88.0
103.0
116.0
124.8
135.9
8.9%
152.0
172.0
195.0
221.0
253.0
13.2%
108.0
110.4
126.0
139.4
149.6
162.6
8.7%
179.0
199.0
222.0
248.0
275.0
11.1%
Radio
8.4
8.3
10.0
11.5
12.7
14.6
15.0%
16.6
19.0
23.0
27.8
33.6
18.1%
OOH
16.1
13.7
16.5
17.8
18.2
19.3
6.0%
21.2
23.1
25.2
27.5
30.0
9.2%
Digital advertising
6.0
8.0
10.0
15.4
21.7
30.1
38.7%
41.2
55.1
69.7
88.1
102.2
27.7%
Total
221
228
266
300
327
363
10.9%
410
468
535
613
694
13.9%
Print
As per the analysis, the market share of TV (37.5 per cent),

Print (44.9 per cent) and OOH (5.3 per cent) reduced
compared to 2012 which was substituted by digital (8.3
per cent) and Radio (4 per cent). Overall, advertising
market is expected to reach INR694 billion in 2018 at a
compounded annual growth rate (CAGR) of 13.9 per cent.

200
201
promotion. The growth in radio in calender year 2013

was primarily due to volume enhancements in Tier II
and Tier III cities and an increase in ad effective rates.
Overall revenues of listed radio players exhibited
double digit growth rate over the previous year,
approximately 12 to 14 per cent. Ad spends of radio
to the total advertising pie grew slightly to 4 per cent
from 3.9 per cent with industry revenues estimated at
INR14.6 billion3.
Summary of different media platforms
Television
The television advertising market reported a moderate
growth of an estimated 8.9 per cent in 2013, which
was higher compared to 8 per cent in 2012 largely due
to increase in ad spend by FMCG companies, state
assembly elections and a successful IPL season.
TV broadcasting market generated INR136 billion as
advertisement revenue which was 67 per cent of the
total revenue generated by the broadcasting industry3.
The share of advertising revenue is projected to
decrease over the coming years due to an expected
surge in subscription revenues owing to digitisation3.
Industries such as real estate, consumer durables,
automobiles, financial services, travel and hospitality
scaled down their ad spends due to tough economic
conditions. FMCG continued to push their advertising
and sales promotion spend in pursuit of volume
growth4.
Radio emerged as the go-to medium for sectors like

Real estate and retail and sectors like FMCG and
Government also contributed significantly to the ad
revenues in 2013.
Radio advertisements are usually more targeted and
can be localised at comparatively lower cost. They are
widely used for rural marketing as their penetration is
higher in rural areas compared to other media.
2013 was a muted year for OOH Industry, primarily

due to tough economic conditions. Total ad spend
was approximately INR19.3 billion with a year on year
growth rate of 5.5 per cent3. Considering the local
and direct nature of Outdoor advertising, sectors like
Real estate, BFSI, media and events and personal
accessories were the top advertisers.
In terms of genres, Hindi GEC which accounts for

highest viewership share of close to 30 per cent,
showed an estimated ad revenue growth between 13
to 15 per cent while the News genre with a viewership
share of approximately 7 per cent suffered with flat
advertising growth in 20134. The Regional channels had
weaker ad revenue growth than the Hindi speaking
market (HSM) channels on account of higher ad
inventory decline due to 12 minutes ad cap4.
Sectors which spent heavily on print were FMCG (12.3

per cent), automobiles (11.7 per cent), education (9.7
per cent) and real estate (8.7 per cent). FMCG, telecom
and automobile have significantly increased their ad
spend in 2013, from 2012, in print media5.
Earlier a very high percentage of Out of Home media

consumption was concentrated among 2-3 industry
sectors. Upto 2011, 76 per cent of OOH media was
consumed by 4 industry sectors viz. media and
entertainment, FMCG, telecom and financial services6.
Over the last two years several sectors like automobile,
retail, white goods, and real estate have increased their
presence . Among OOH formats, b illboards continue
to be the preferred medium of choice generating 55
per cent of the advertising revenue4. Transit OOH
business continued to experience accelerated growth,
especially in airports4.
Print
Print media reported a sluggish growth of 8.7 per
cent in 2013 clocking in approximately INR163 billion
which is 67 per cent of the total revenue generated by
the medium, while the rest coming from circulation3.
The Hindi print market saw 11.3 per cent growth in
advertisement revenues while Vernacular market saw
10.8 per cent growth, with English print reporting a
sluggish growth of 5.2 per cent3.
Radio
Radio continued to show double digit growth
estimated at 15.0 per cent over the previous year3
as advertisers preferred this media due to its cost
effectiveness coupled with more local, focussed

OOH
Digital
The digital advertising market continued the growth
trajectory clocking in estimated revenues of INR30.1
billion with growth rate of 38.7 per cent over the
last year3. The digital domain is attracting advertising
budgets due to traction of social and mobile media,
its ability to monitor online campaigns in real time and
its cost effectiveness. The total market share of digital
media was 8.3 per cent4 of the total advertising spend
in 2013 compared to 6.7 per cent6 in 2012.
05. Pitch Madison media Advertising Outlook 2014

06. FICCI KPMG India M&E Report 2013
Percentage of contribution to digital ad revenues
All the major sectors have established a presence on

the digital platform and rising spends will likely continue
to expand the digital pie. Digital advertising is mainly
dominated by online Search and display ads having
a combined market share of 67 per cent followed by
mobile, social media, emails and videos7. In todays
scenario the power of E-commerce companies cannot be
overlooked. These companies strongly help in targeted
advertising with the amount of user data they control.
By using right analytical tools, ecommerce websites can
help brands in establishing relationships with their target
customers through consistent tracking of their shopping
and purchase behaviour.
Performance of industry sectors
Source: IAMAI: Digital Advertising in India, 2013
The performance of the advertising industry or the

quantum of ad spends is directly proportional to the
performance of the different sectors as high growth
sectors typically have generous advertising budgets
whereas slow growth sectors have a more cautious
approach towards ad budgets.
Some of the high spending sectors in 2013 were
FMCG, E-commerce, Media companies and Education
owing to their growth trajectories and targeting of new
markets and audiences. We present qualitative analysis
of industry sectors performance in 2013 and the way
forward in the table below.
Sr. No
Sector
Performance update in 2013
Automobiles
Moderate growth in 2013; Expected to pick up in the first half of 2014 as many new launches are lined up
Banking and
Financial Services
Growth was muted in 2013; Increase in interest rates, erratic behavior of stock markets, issues of Insurance companies with
IRDA have held back the sector; though Health Insurance is picking up; Second half looks promising due to expected change
in policies due to foreseen formation of new government
Consumer Durables
Remained flat in 2013, first half was sluggish but it made up in the second half during the festive season reporting a flat
market growth rate
E-commerce / Travel
websites
Grew fast in 2013; Combined AdEx of E-commerce and travel websites constituted substantial portion of total AdEx and was
amongst the top ten spending sectors
Education
One of the fastest growing sectors in 2013; Spending is mainly in the unorganised ad market
Entertainment
Reported growth; Promotion of Television channels, shows, movies have increased
FMCG
Garnered double digit growth (upto 15% in some categories); Spent heavily in the first half of 2013, in the second half
advertising budgets were cut down; due to increase in input costs, macro-economic factors like depreciating rupee; Sector
revived towards the end of the year
Luxury / Fashion
brands
Growing at a fast pace; As Luxury market is in the nascent stage in India its growth rate is very high but its overall
contribution to the AdEx is still low
Real Estate
Growing steadly; More supply leading to companies spending in advertisements to lure people to shift from one property to
another
10
Telecom
Flat, hit due to scams; Was giving double digit growth before the slowdown in the last 24 months
07. Digital Advertising in India Report by Internet and Mobile Association of India (IAMAI), March 2013
202
203
Round up of the key trends and themes for

growth
Regional advertising
Regional media provides tremendous value for money
for advertisers due to its farfetched reach and its costeffectiveness. In the print space, advertisers sustained
their spends on Hindi and Vernacular print media, due to
their rising volumes because of increasing literacy rates
and deeper penetration into the Tier 2 and Tier 3 markets.
As a result of this, the segment reported an (early) double
digit growth8 in 2013. Sectors like automobile, education,
FMCG, retail and finance were the largest spenders in
the regional print category8. Vernacular had an overall
revenue share of 31 per cent in 2013 (with the four South
Indian states generating a healthy percentage of the
total vernacular print advertising revenues in 2013) and
witnessed an annual growth rate of 10.8 per cent8. West
Bengal contributes INR6 billion to the Indian vernacular
print advertising revenues with annual growth rate of 10
per cent9. West Bengal and Maharashtra are also strong
hold for regional print media.
In the television space, regional channels comprising
regional GECs, news and movies account for second
largest portion of viewership after Hindi GECs in
India. National advertisers account for 70 per cent of
advertisement volumes on regional channels due to their
deep Tier 2 and Tier 3 reach8.
Year 2014 looks promising as the government spend on
regional TV channels and vernacular papers is expected to
see significant growth owing to the general elections.
Rural marketing an upcoming trend
Rural marketing is an absolute need owing to

the surge in rural consumption due to many
factors such as good monsoon, government
schemes like NREGA etc. Consumer durables
demand grew 1.5 times more in rural areas
compared to urban markets in the last year. But
it is difficult to predict whether media agencies
will get a significant share of the pie as most of
the activities are BTL where few big organised
agencies are present.
- Ashish Bhasin
Chairman and CEO South Asia,
Dentsu Aegis Network
wall paintings, mobile vans, boat branding, road theatre,

haats, funding religious fairs and festivals etc. These
mediums of reaching out to rural customers have proved
to be very effective along with being affordable. Apart
from these BTL activities, Cable and Satellite penetration
has helped spread more information about products in
rural India. Radio is one of the most widely used medium
in rural markets because of its reach.
Some of the marketing strategies adopted in rural
areas by advertisers are direct Marketing, influencer
marketing (focus on individuals with influence over
potential buyers rather than target market as a whole),
targeting herd mentality (focussing on groups where
people are influenced by their peers) and Corporate Social
Responsibility (CSR) activities.
Top companies like HUL, Coke, Marico, Godrej, and
Pepsi among many others clocked a healthy percentage
of their overall sales from rural markets. FMCG and
Automobile companies were the biggest advertisers
in rural markets as they looked for sales growth in rural
areas10. Approximately 80 per cent of the rural marketing
efforts by FMCG players comprise of Below the line
(BTL) activities10. Other marketing activities include rural
marketing initiatives like Khushiyon ki Doli(a campaign
designed to inculcate good personal hygiene habits
amongst the rural masses thereby creating greater
preference for the companys brands) by Hindustan
Unilever which was initiated in 2010 to reach out to media
dark villages and connect with the direct users (women)11.
Similar initiatives have been carried out by Colgate to
promote oral hygiene in the past12.
Mobile advertising
Mobile advertising has emerged as the fastest growing
digital medium reporting a growth of 70 per cent in
2013. It outperformed the industrys expectations with
estimated collections of INR3.4 billion in 2013 as mobile
internet users dominated the total internet user base
capturing an overall share of 61 per cent 8. Market is
expected to grow at 50 per cent and reach INR5.1 billion
in revenue by end of 2014 due to increasing penetration
of internet and setting up of 3G and 4G infrastructure8.
FMCG companies increased their advertising spend on
the mobile platform significantly in 2013. According to
InMobi, this sector increased ad spends by 175 per cent
on its mobile advertising network. Giants like ITC, Reckitt
Benckiser, Hindustan Unilever, Mondelez and Nestle ran
more than 30 campaigns and used mobile marketing
very effectively13. Travel and financial services were
amongst the other growing sectors. The digital classifieds
companies have also increased their mobile presence in
areas like restaurants (Zomato and JustEat), automobiles
(Zigwheels, Cardekho, Carwale), and real estate (99acres,
Magicbricks and Commonfloor) etc.
A large number of companies are looking at simple and

inexpensive ways of marketing to connect and engage
directly with their rural consumers like melas, posters,
08. Industry discussions conducted by KPMG in India, KPMG in India analysis

09. Print special August 2013, www.afaqs.com
10. Dont flirt with rural marketing, www.bestmediainfo.com, 8 October 2013
11. HUL contacts 25 million rural consumers through Khushiyon ki Doli, www.hul.co.in, accessed on
7 March 2014
12. Rural initiative, www.colgate.co.in, accessed on 7 March 2014
13. FMCG mobile ad spends grow, Times of India, 21 January 2014
Social media
Social media has grown 37.4 per cent in user base
over the last year with a share of 13 per cent of the
total digital adspend. Facebook has emerged as a
very important platform for marketers in India which
has approximately 60 million unique visitors in India,
followed by Twitter, YouTube and blogging. Advertisers
are now experimenting with other properties like
Instagram, Tumblr etc. In 2013, nearly 2 out of every 5 ad
impressions were generated on social media websites15.
14
In 2013, Ad conversion ratio has been highest for email

ads, ads in social networking sites and mobile ads16.
14. eMarketer newsletter, 19 November 2013 Indias Online display ad landscape, www.comscore.
com, 4 December 2013
15. Digital Advertising in India Report by Internet and Mobile Association of India (IAMAI), March 2013
Percentage share of impressions by

publisher
Publisher
Share (per cent)
Social Media
39
Portals
15
Services
14
Entertainment
News/Info
Business/Finance
Search/Navigation
Lifestyles
Directories
Retail
Sports
Others
Source: Indias online display ad landscape, www.comscore.com, 4 December 2013

*Ad impressions: In context of online advertising, an impression is a measure of number of times an ad
is seen whether it is clicked or not.
Emergence of Digital Media and the way forward

Article by CVL Srinivas, CEO, GroupM, South Asia
The internet population in India recently crossed the 200 million
mark. By the time you read this article we should be touching close
to 250 million, with over 60 per cent of these users accessing the
net on their mobile devices. By next year, most of the TV households
would have got digitised. Smart TVs are gaining in popularity,
changing the way consumers interact with content.
Ad spends on digital media (internet and mobile) have been
growing at 30 to 40 per cent year on year. As per the latest GroupM
TYNY estimates, digital media in India will attract approximately
INR34 billion in advertising revenue which is nearly 8 per cent of
the total ad pie in 2014. Within the next two years, we are likely
to see nearly 50 per cent of India connected to the internet, a large
majority of them through their mobile devices.
From the early days of search campaigns, when categories like
travel, financial services and auto were the first movers, today
digital media is being used lot more creatively by advertisers across
the board. The emergence of video is making digital an extension
of TV plans in many cases. TV heavy FMCG clients are increasing
spends on digital. Multi screen planning is becoming the order of
the day, with media planners evaluating video channels on the
internet alongside TV channels.
Digital media is also helping advertisers integrate campaigns
across multiple touch points in a far more seamless manner. Brands
that create activation platforms find digital to be a convenient
channel to seed, capture and measure interactions with consumers.
Since digital offers a two way communication channel to the
advertiser, campaigns on digital can be devised so as to provide
utility value to the consumer thus increasing levels of engagement
with the brand. Mobile apps are being used creatively by brands to
provide information, beauty tips, recipes and the likes to consumers

on the go. These apps provide high levels of engagement by getting
consumers to talk, ask, react and share.
Thanks to the availability of data in real time, digital media is
helping create a new paradigm of media planning, which is
audience planning. Instead of contextual targeting with poor ROI,
audience planning helps fine focus media plans to reach the more
relevant audiences.
Going forward we will need to adopt digital not just as a medium
but as a mindset. The biggest challenge for a marketer today is
to be able to adapt to the spread and speed of his consumers
interactions and opinions, which are increasingly moving to the
virtual world. Many organizations are setting up digital data centers
which capture consumer interactions with and opinions about the
brand in real time, to be able to move marketing from a reactive to
a proactive function. Most marketers feel they are losing control
over their brands in the digital era. Investing in a digital data center
helps get back control.
The future growth drivers of digital are: better infrastructure i.e.
more bandwidth, development of language content, growth of video
content and wearable technology. Ultimately, digital will become
all encompassing: be it connected TVs, online radio or wearable
devices. Media brands will need to become format neutral. Current
models of measurement will give way to real time data. There will
be an explosion of content. Technology, Data and Content are the
three pillars on which our industry will grow.
Disclaimer : Unless otherwise noted, all information included in this column/article was
provided by the author CVL Srinivas, CEO, GroupM, South Asia. The views and opinions
expressed herein are those of the authors and do not necessarily represent the views and
opinions of KPMG in India.
204
205
Upcoming advertising trends across media
Digital media is taking advertising to a whole new level

where customers interact with brands and products
virtually through their campaigns. New forms of
interactive and immersive campaigns done by leading
automobile companies like Mahindra (display of a virtual
cheetah during the launch of their XUV series) and Food &
Beverages companies like KFC and McDonalds are some
of the campaigns that stood out17.
Campaigns using Augmented Reality - Concept

of Augmented Reality is recently gaining popularity
among advertisers in India. In such campaigns, reality
is augmented by enhancing what we see, hear, feel
and smell. Digital agencies are developing Augmented
Reality enabled applications for mobile, tablets etc.
which can link physical images to a catalogue of online
videos, 3D models, animations etc. It provides new
and interesting ways to engage and interact with
customers. Agencies like Blink, Adstuck, Xenium,
Hungama, Gamozz etc. are providing Augmented
Reality solutions to the advertisers18. Companies like
DLF, Pepsi, HP, Axe, Toyota Innova etc. have augmented
their logos which appear on newspapers and
billboards19. This helps their customers get connected
to their videos, brands, online catalogues etc through
the cameras on their smart phones and tablets. Aditya
Birla Group, Samsung and Sony are some of the other
companies using Augmented Reality techniques20.
Branded content - Three years ago, beverages

giant Coca-Cola took an innovative step to promote its
brand among youth by tying up with broadcaster MTV
to create Coke Studio which has created an immense
brand value for the company among youth. In January
2014, PepsiCo India has collaborated with MTV to form
Pepsi MTV Indies channel which will be a platform to
showcase cultural music with an investment of INR400
million26. Thus, branded content is gaining popularity in
the recent years.
Nowadays, producers are attempting to integrate
brands with the show at the stage of script writing
itself. Tata motors promoted their SUV range of
vehicles through the espionage drama 24 which was
aired on Viacom 18s colors channel last year. The script
required the protagonist to drive an SUV, and hence it
was decided to collaborate with an SUV manufacturer
for the promotion through the show. Thus, if the
collaboration is successful, it becomes a win-win
situation for the advertisers as they get enormous
publicity on a successful show and the producers get
early sponsorships26.
Adversioning - Like the Internet, it is now possible
to carry out targeted ads on the same TV channel in

different regions at the same time. This has been made
possible by patented Adversioning technology. Amagi
and Vubites are the early entrants in this field which
are making this smart advertising possible21. It is now
possible to do targeted ads on channels like Times
Now, CNN IBN, Ten Sports, UTV movies etc22. Amagi
has has covered more than 100 cities23 while Vubites is
present in more than 11 states24, helping advertisers to
minimize wastage through target advertisements on
TV.
Interactive and Immersive ad campaigns -
These campaigns prompt viewers to interact with

the advertisement by selecting onscreen options like
different product categories, gender etc. and based
on the selection customised content is displayed. E.g.
KFC India Krushers campaign where viewer selects
Krusher flavour and gender and based on the selection
different moods of the character are displayed on
screen25.
17. Hungama launches augmented reality campaign for Mahindra, www.afaqs.com, accessed on 7
March 2014
19. Latest Campaigns, www.adstuck.com, accessed on 7 March 2014
20. The Economic Times, 22 October 2013
21. The Financial Express, 18 February 2014
22.
23.
24.
25.
26.
www.amagi.com, accessed on 7 March 2014

www.yourstory.com, 20 August 2013
Coverage, www.vubites.com, accessed on 7 March 2014
KFC India Krusher, www.blinksolution.com, accessed on 7 March 2014
Smart selling on the Idiot Box, Business Today, 4 March 2014
2014: Top 10 trends that will inspire brands to help consumers discover ways to express
themselves
Creative Collaborators: Unleashing Unique Talent
Article by Anupriya Acharya,

Group CEO, ZenithOptimedia India
ZenithOptimedia has identified six macro trends globally in its 2038
futures project. The project sought to look at how the world might
change over the next 25 years and to consider the implications for
marketers. From those six macro trends here are the 10 specific
changes in consumer behaviours fuelled by technological
developments - that we believe will emerge and develop during
2014:
Experience Quest: The Journey to Self-Discovery

Instead of indulging in material things, consumers choose to hunt
for new experiences to explore the unknown, discover possibilities
and face with surprising encounters. The amalgamation of these
experiences is what makes the individual unique and form building
blocks of a highly individual story to be shared.
The Goal Wrist: Measuring Personal Success

Wrist devices to measure health and fitness are set to increase in
popularity this year. Harnessing the power of data, brands are well
placed to offer rewards for fitness achievements.
Community Consumption: Rooted in Self Interest

With ongoing economic pressures, more consumers will join
together to negotiate discounts and to share advice. Peer-to-peer
technology companies are facilitating this and brands can play a
role.
Photographic Timeline: The Smart Showcase of Self

The emergence of a variety of user-friendly photography apps in
recent years help unleash our creativity to tell interesting stories
with photographs. We can expect a more mindful, selective smart
sharer and photographer where more attention goes to who to
share with, what to eternalise and the focus on meaningful value
exchange.
Challenges
Measurement The uncertainty around the TV
measurement is expected to continue until the launch

of BARC, later in 2014, with the I&B ministry and the
industry broadly adopting the new measurement
system, some companies are now relying on media
agencies for data on media consumption27. The
recent objections around the latest IRS survey and
subsequent withdrawal of the survey has also put
some uncertainly in the print media market.
27. Brands fret over ratings-darkness, Business Standard, 23 January 2014
There is a significant increase in the number of individuals

who have created content that stand should to shoulder with
professionally produced news and entertainment. In 2014, we
anticipate more of these everyday producers to collaborate with
mainstream content publishers, distributors and brands to create
content.
Death of Piracy: Rise of on-demand content

Many consumers expect digital content should be free, however,
this is now changing as the demand for better quality, relevant and
exclusive content are key considerations encouraging consumers
to pay for content. With the possibility of cutting out advertising
especially in online streaming channels, brands will need to find
new and engaging ways to provide content experiences that people
value and trust.
The Immersive Theatre: Multi-faceted Screens

Although we may migrate to different devices, the TV screen in our
living room is taking helm once again. The converged living room
is converted into a powerful entertainment hub where all play and
social life come together - thanks to new forms of gaming, new
forms of audience participation and rich social experiences.
Biometric Pursuit: Making Sense of Emotions

2014 will see biometric technology move into the mainstream. By
identifying even the subtlest nuances of our body language, brands
will be able to match relevant content with our moods.
Intimate Ads: Opting-in to Shop

In 2014, digital ads will improve as our mobiles get to know us
better, eg the surge of apps that can anticipate our daily needs.
Push messaging will become more intimate and less disruptive.
High street to iStreet: Reinventing the In-Store Experience

In 2014 and beyond, the high street will become the i-street
as digital technology step into the real retail space to provide
personalised and unique experiences. We can expect the retail
space becoming a dramatic hub of exploration, interactivity and
creativity.
Disclaimer : Unless otherwise noted, all information included in this column/article was
provided by the author Anupriya Acharya, Group CEO, ZenithOptimedia India. The views and
opinions expressed herein are those of the authors and do not necessarily represent the views
and opinions of KPMG in India.
Digital tracking and privacy The tug of war between
protecting customer privacy and tracking to gather data

is increasingly a debate with media companies. There
is huge demand for customer data. Online tracking
in the form of tracking cookies has increased over
the years, as websites track an individuals browsing
history, clicks, attention span, and how much time they
spend on a particular website to build up a surprisingly
detailed profile of a customer. This data is then used to
serve up targeted ads. Consumers have become more
aware and are making an effort to remove or block
tracking cookies28.
28. Challenges faced by the online advertising industry, www.contentcrossroads.com, 11 March 2013
206
207
Maxus, IPG Mediabrands, Havas Media Group,

Starcom MediaVest Group, Vivaki etc. are some of
the largest media buying agencies in the country.
Commissions charged by media buying agencies range
between 1 to 3 per cent of the total media spend30.
New media and new models - As digital media grows
and advertising on digital media increases, advertisers

and agencies are trying to dynamically learn how to
leverage this medium. Optimising their presence
around social media, display, search, SEO could require
new set of skills and understanding.
OOH A key requirement of OOH medium is a
standardised measuring tool to justify spending in

terms of ROI. Regulating a universal measurement
system could help in the growth of the industry, as
well as it could add confidence in the media. The out of
home sector is structurally exposed to a downturn, as
it is a high fixed-cost business reliant upon long-term
commercial contracts. Despite heavy license fees and
taxes, permissions from various authorities and lack of
clarity on regulations it continues to create operational
challenges for the industry29.
Full service agencies offer their clients a full range of

services such as creative, planning and media buying.
Other services offered include media research, event
management, trade shows, publicity, public relations
etc. Fulcrum media was the first full service agency set
up in 1995 for HUL in India. Commission rates for full
service agencies are between 8 to 10 per cent of the
total media spent by the advertisers30.
in SEC A segments increasingly use DVRs, reduce

their engagement with print and increase use of video
on demand and new media, advertisers may have to
innovate on creating awareness whether through in
programme brand presence, co-branding with shows,
presence on social media and sponsorship and BTL
activities. All this could make it a more complex and
innovative task for agencies and advertisers.
Media and advertising agencies act as a link between

advertisers and media owners by providing services like
developing advertising content, planning and buying
media space across various platforms, PR services etc.
to advertisers. There are broadly the following types of
advertising agencies:
Creative agencies
Creative agencies ideate, conceptualise and develop
content to market clients products and brands which
is communicated to audiences at large through various
media. Leo Burnett, Ogilvy, Taproot, etc. are some of
the well known creative agencies in India. Creative
agencies could charge a commission between 7 to 9
per cent of the total ad spend. There has been a shift
observed in the remuneration model from commission
based to fixed fee based. Almost 50 per cent of the
revenues on the creative front were fixed fee based in
201330. Creative work usually commands 75 per cent of
the total ad agency revenue30.
Media buying agencies

Media buying agencies plan and buy media space for
clients, across multiple platforms. These agencies
purchase large amounts of ad inventory in terms of
television time and print space and hence are able to
command good rates from media owners. Mindshare,
29.
30.
31.
32.
Challenges faced by the online advertising industry, www.contentcrossroads.com, 11 March 2013

KPMG in India analysis, Industry discussions conducted by KPMG in India
The Times of India, 21 January, 2014
Adage.com, 25 April 2011
In-house agencies
In-house agencies, which are owned and operated
by the company itself, does creative work, PR and
brand building for the company. Coca-Colas Content
Factory, Best Buys Yellow Tag Productions, Fidelity
investments Fidelity Communications and Advertising
are some of the in-house agencies set up in order to
reduce cost32. However, the media buying services
are generally outsourced to professional media buying
agencies as they get better deals due to bulk buying.
Changing media habits As consumers especially
The agency business
Full service agencies
Specialised agencies
Specialised agencies are generally started by first
generation entrepreneurs offering specialised services
in new media, mobile advertising, social media or
services in specialised segments like rural marketing,
digital marketing etc. Advertisers prefer specialised
agencies in specific niche areas as they bring subject
matter expertise and are less expensive compared to
full service agencies. Agency size can vary from 5 to
200 employees. Social Samosa, Social Wavelength, are
some of specialised agencies in social media space 30.
Vserv.mobi, InMobi and Vuclip provides platforms for
advertisers to advertise on mobile31.
Media buying industry structure

Mindshare, Maxus, Starcom MediaVest, DDB MudraMax,
Dentsu Media are some of the largest media networks
operating in India. These media networks operate as part
of large owner groups like WPP, Publicis, Omnicom, IPG,
Dentsu, Havas Media, etc. These groups also have various
creative brands under their fold. The market size of the
media buying and creative agency business is estimated
at ~10 per cent of the overall AdEx, which was INR362.5
billion in 201332.
Media buying agency tree

AGENCY TREE
Independent/non-part
of networks
Owner groups/media
branch
Omnicom Inc/
Omnicom
Media Group
Interpublic
Inc (IPG)/
Mediabrands
WPP Plc/
GroupM
BPN Brand
Maxus
OMD
BPN Brand
Maxus
Initiative
MEC
Initiative
MEC
Red Fuse
(Colgate
Palmolive)
UM
Publicis SA/
Publicis
Media
Dentsu Inc/
Dentsu Aegis
Network
Carat
OMD
Starcom
MediaVest
SMG
PHD
Starcom
Vizeum
PHD
MediaVest
Vizeum
DDB Mudra
Max
Zenith
Optimedia
Dentsu
Media
Zenith Optimedia
Equinox
Matrix
Lodestar UM
Carat
Mediacom
Mediacom
Vivaki
Partnerships
Unit
Mindshare
Mindshare
Mindshare
Fulcrum (Unilever)
Media
Palette
Cubic
Havas SA/
Havas Media
Group
Madison
World
Percept
Group
Havas
Media
Madison
Media
Havas Media
Madison
Media
Madison
Media plus,
Infinity,
Sigma, Omega,
Pinnacle
(Cadbury)
Arena
Launched mid
2013 to
handle LG
electronics
Allied Media
RK Swamy
Hansa Group
Hansa Media
Group
Media
Direction
Hansa
Media
Services
Platinum
Media
Crest (ITC)
Key
Motivator
Network
Local Agency Brands
Sub-brands
Creative agency tree
250
239
200
150
127
95
100
56
50
0
High-end
Multiplex
Source: IAMAI:
Digital Advertising in India, 2013
Multiplex
Single Screen
Low-end
Single Screen
Omnicom is a global marketing and corporate communications company which had announced its merger with Publicis
Group to create the worlds biggest marketing Communication Company in July 2013. The proposed merger will be effective
worldwide over the next 12-18 months33.
208
209
The 10 per cent commission rate is a combination of fee charged for creative and media buying. ~70 per cent of the
market share is dominated by 5 network groups followed by a long tail of smaller unorganised boutiques/specialised
agencies 34.
Performance of media buying agencies in 2012*

Sr. No
Local agency
brand
Owner Group
Industry
share 2012
Mindshare
GroupM
18.2 %
15.0 %
1035
81 %
Madison Media
Independent
11.5 %
15.0 %
655
80 %
Lodestar UM
Mediabrands
9.6 %
19.0 %
545
78 %
Maxus
GroupM
9.1 %
11.0 %
515
80 %
MediaCom
51 % Madison W. 49 % Group M
6.3 %
10.0 %
355
65 %
ZenithOptimedia
Publicis Media
6.0 %
18.0 %
340
83 %
StarcomMediaVest
Publicis Media
5.5 %
27.0 %
310
79 %
OMD
Omnicom media group
5.3 %
16.0 %
300
80 %
MEC
GroupM
5.3 %
13.0 %
300
79 %
10
Havas Media
Havas Media Group
4.1 %
43.0 %
235
79 %
11
Initiative
Mediabrands
4.1 %
-27.0 %
230
90 %
12
Allied Media
Independent
4.0 %
5.0 %
226
71 %
13
DDB MudraMax
Omnicom Media Group
3.1 %
31.0 %
175
69 %
14
Carat
1.7 %
5.0 %
95
58 %
15
Dentsu Media
1.4 %
0.0 %
80
90 %
16
Motivator
GroupM
1.4 %
10.0 %
80
90 %
17
Media Direction
Independent
1.4 %
10.0 %
80
90 %
18
BPN Brand
Mediabrands
1.4 %
25.0 %
80
88 %
19
Vizeum
0.6 %
30.0 %
35
60 %
100 %
13.0 %
5671
79 %
Total 19 Agencies
Growth rate
12/11 %
Overall activity21 2012

rounded (USD mn)
Buying and planning

share
Source: RECMA India report, August 2013

* As per the latest data available from RECMA India report released in August 2013
According to RECMA, GroupM has 37 per cent market

share, making it the largest group of ad networks in
India followed by Mediabrands 15.1%, Madison 14.7%,
Publicis 11.5% Omnicom media group 8.4% and others.
In terms of growth Havas Media, DDB MudraMax,
Starcom MediaVest, Vizeum, BPN Brand were the fastest
growing network companies in 2012 over 2011. Of the
overall billings of USD5671 million, media buying and

planning constituted 79 per cent of the spend whereas
Digital35 and Diversified services36 constituted remaining
21 per cent. Local agency brands like Carat, Vizeum, DDB
MudraMax, MediaCom, and Allied Media have major
portion of their billings coming from the non media buying
and planning work37.

35. Overall Activity is now the unique metric retained by RECMA for ranking media agencies. It includes buying and planning billings as well as three other categories of services: 1- Digital services (six segments
from display to web production); 2- Diversified Services (Branded Content/ Events/ Sponsoring/ Sports marketing; Local/ retail /multi-cultural/ Econometrics/ ad hoc research; Marketing consulting/ Bartering etc);
3- International Account Coordination. Therefore Overall Activity (OA) volume is larger than Billings which represents from 90% to 50% of a media agency OA.
36. Constitutes 6 segments from display to web production as per RECMA report August 2013
37. RECMA India report, August 2013
Out of 19 agency brands mentioned in the table above, 12 agencies are active in the digital space whose billings are
mentioned in the table below:
Digital and diversified services billings

Sr. No
Local agency
brand
Owner Group
Digital +DS Billings

2012 rounded (USD mn)
Mindshare
GroupM
197
4%
Madison Media
Independent
131
5%
Maxus
GroupM
103
9%
MediaCom
51% Madison W. 49% GroupM
124
40
32%
ZenithOptimedia
Publicis Media
58
17
30%
StarcomMediaVest
Publicis Media
65
16
24%
OMD
Omnicom Media Group
60
15%
MEC
GroupM
63
13%
Havas Media
Havas Media Group
49
10
21%
10
DDB MudraMax
Omnicom Media Group
54
6%
11
Carat
40
4%
12
Vizeum
14
40%
Total digital billings

Source: RECMA India Report, August 2013
Digital billings were 11 per cent of digital and diversified

billings combined and 2 per cent of the overall billings of
USD1201 million. GroupM reported the highest digital
billings of USD45 million followed by Publicis media and
Madison World. A large part of the digital spend also
happens through specialised agencies which are not a
part of these network groups.
Evolution of the ad agency business

Ad agency business has evolved over two decades in
India in terms of service offerings, remuneration model
and market structure mainly due to economical and
technological factors. We represent five trends in the
next table which highlights the evolution of the ad agency
business.
Digital Billings 2012

rounded (USD mn)
Digital Billings (% of
Digital +DS Billings)
USD134 million
210
211
Evolution over the years

Trends
Late 1990s
2010 onwards
Market
fragmentation
Top five group of networks had a

market share of 95 per cent
Top five groups of networks have a market share of less than 79 per cent
Unbundling of full
service agencies
Full service agencies used to fulfill

all the needs of advertisers from
creative content development to
media planning and buying
Full service agencies unbundled to offer 'creative and planning services' and 'media buying
services' separately; industry further restructured to offer media buying and planning services
under one roof while creative agencies only focused on the creative work. Today, there is a
consolidation wave prevailing in the industry as Media buying and planning agencies acquire
digital agencies to strengthen their position and offer multiple services.
Change in the
Remuneration model
Full service agencies commanded

a strict remuneration of 15 per cent
percent from clients
After unbundling, creative and media planning agencies took a commission of 12.5 per cent
while media buying agencies got 2.5 per cent as commission; today Media buying and planning
agencies get between 1 to 3 per cent as commission while Creative agencies usually charge a
fixed fee or 7 to 9 per cent commission.
Emergence of
specialised agencies
Hardly any specialised agency
Surge in the number of specialised agencies due to advent of technology and opening up of
market in Tier 2 and Tier 3 cities. Agencies have come up in the areas like analytics, social
media, mobile, rural marketing, CSR etc.
Client interaction has

changed from Single
agency to multiple
agencies
Advertiser dealt with not more than

1 or 2 ad agencies for a campaign
At least 4 to 5 agencies to carry out online campaign along with creative and media buying and
planning agencies; today in certain cases almost 10 to 12 agencies are appointed to carry out
cross platform integrated campaign across various media like mobile, social media etc. across
rural and urban areas.
Market fragmentation
The industry structure has changed over the last two
decades with more and more fragmentation which is
likely due to emergence of new media, the emergence
of specialised boutiques, increase in customer touch
points, and opening up of the market in Tier 2 and Tier 3
cities. New advertising agencies have come up to cater
to the increasing needs of advertisers to reach out to
their audiences in urban as well as rural areas. Some
of these touch points include online, social media,
mobile, restaurants, airlines, in transit OOH like airport
terminals, railway terminals, cinemas, information
kiosks etc. Regional print media is getting traction as
advertisers are focussing on Tier 2 and Tier 3 cities
to push sales. Thus, the market has become highly
fragmented, which is evident from the fact that the
top five groups of networks constitute less than 79 per
cent of the market share in terms of overall billings38,
with the rest occupied by independent networks and a
long tail of specialised ad agencies. This is in contrast
with the market structure two decades ago when top 5
groups commanded about 95 per cent of the market 39.
Unbundling of full service agencies

In late 1990s and early 2000s, many agencies which
focussed on the creative part of advertisements
did not have the throughput or the expertise to buy
media efficiently. Thus, some full service agencies
experienced in media buying set up Agency of Record
(AOR) department within their agency to buy media
space for advertisers whose creative work was not
38. RECMA India Report, August 2013

40. Media planning and buying, by Arpita Menon, Released in 2010
handled by the agency, giving agencies the width to

work with more clients and increase its revenues.
Realising the economies of scale involved, agencies
branded their media departments and hived them off
as separate units40.
Today, it is likely that industry is heading towards
consolidation as media buying networks are acquiring
digital companies to offer digital services to their
clients and develop proprietary research tools to
increase clients return on investment.
Media agencies have gone through a full circle

of evolution starting from unbundling of bundled
agencies in late 1990s to evolution of specialised
agencies in late 2000s and finally consolidation
of agencies in 2013.
- Ashish Bhasin
Chairman and CEO South Asia,
Remuneration model
Along with the evolution of the agency structure, their
remuneration model has also changed compared to
earlier times when there were full service agencies
charging close to 15 per cent commission on the total
billings. With the hiving off of the media planning
agencies, commission was split between creative
and planning agencies and media buying agencies
with former getting 12.5 per cent and latter getting
2.5 per cent of the total billings. Again, the service
offering was restructured and planning merged with
media buying as inherently, media buying and planning
is interlinked. However, with rising cost of media
buying, trimming of marketing budgets and increased
commoditization of advertising services, there has
been a sharp fall in the agency commissions. Some
genres such as the creative agencies moved to a fee
based model, relatively unscathed by the media spend
cuts of the advertiser. Even if they are paid via the
commission model, they manage to get 7 to 9 per cent
of the total billings in their kitty41.
- Anita Nayyar
CEO Indian and South Asia,
Havas Media Group
Emergence of specialised agencies

Emergence of new media like social media, mobile
and new avenues like rural marketing have prompted
entrepreneurs to come up with specialised solutions
to cater to the growing needs of advertisers to reach a
larger audience base through multiple touch points.
In the creative business today, the commissionbased model has become a thing of the
past. Clients have started to understand and
appreciate the contribution made by their
communication partners and hence have moved
to a fee-based system predominantly.
The advertising agency business in India has

gone through intense entrepreneurial phases
followed by consolidation. This is almost cyclical
and currently we are seeing the entrepreneurial
phase in full bloom. Consolidation is soon to
follow.
- Pratap Bose
DDB Mudra Group
- Dr. MG Parameswaran
Advisor,
Draftfcb + Ulka
However, the media buying agencies were forced to

accept low commission rates. Agencies which have
relatively lower billings demand a 2.5 to 3 per cent
as commission, whereas large agencies could get
anything between 1 to 3 per cent. This is on account
of the total billings of large agencies being relatively
higher, and hence they make up in absolute terms.
Media buying and planning agencies are increasingly
looking to widen their expertise in the fields of social
media, activation and below the line advertising,
where commissions tend to be higher. Social media
for instance, commands 10 to 15 per cent commission.
Overall, advertisers pay 7 to 10 per cent of their total
billings to agencies out of which 2 to 3 per cent is
spent on media buying and planning agencies 41.
41.
42.
43.
44.
45.
Media buying has been a fundamentally

challenged industry where large agencies have
been playing volume game. However over a
period of time, rates have started becoming
hygiene and its smart buying tactics which are
making all the difference. Clients preference
for large agencies (with commoditised buying)
seems to be changing with time - essentially
establishing that size does not matter anymore.

The Times of India, 21 January, 2014
The Economic Times, 25 April 2012
www.afaqs.com, 19 April 2013
www.medianama.com, 13 August 2012
Many digital agencies have come up offering

specialised services like Search Engine Optimization
(SEO), Content Management Systems (CMS), Social
Media marketing, marketing through emails, banners
etc., developing mobile apps, mobile websites and
websites etc. Specialised agencies like Social Samosa
and Social Wavelength offer social media services41;
Agencies like InMobi, Vserv.mobi and Vuclip are some
of the specialised agencies in Mobile space providing
mobile advertising platform42.
2013 saw a series of acquisitions of these specialised
agencies by the media groups, in order to strengthen
their digital service offerings. For instance, Publicis
acquired full service digital agency Indigo Consulting43
and technology service provider Neev44 among
many others and aligned it with Leo Burnett and
Razorfish respectively. Dentsus Aegis media acquired
Communicate 2 to offer wide range of digital services
to their clients45.
212
213
More recently, DDB Mudra, part of the Omnicom

Group has acquired Bangalore based digital agency
22feet merging the latter with Tribal Worldwide India
creating a new entity under the Omnicom banner
known as 22feet Tribal Worldwide. The new entity will
continue to offer the same services as 22feet which
include end-to-end digital and mobile branding and
marketing solutions46.
Media agencies have evolved from offering

media planning and buying services to providing
integrated communication solutions for brands.
The media agency (if such a term exists) of
the future will be built on technology, data and
content.
- CVL Srinivas
CEO,
GroupM South Asia
outreach campaigns in rural areas, monitoring, Haat

and Mandi contact programs, Melas and other
marketing communication activities etc 47. Anugrah
Madison is another agency having expertise in the rural
markets which is a tie-up between Anugrah Marketing
and Madison media48.
Client interaction has changed from single

agencies to multiple agencies
In todays fast changing world, advertisers are more
than willing to experiment with different ideas and
communicate to customers through different channels.
Many advertisers appoint multiple agencies for
carrying out campaigns through various platforms
like mobile, social media, OOH and in tier 2 and tier 3
cities where larger agencies might not have enough
reach. Many advertisers are interacting with multiple
agencies rather than depending on a full service
agency for all the services. There are advantages and
disadvantages attached to both.
The days of a full-service-agency got seriously

stressed when media got pulled out into a
separate vertical. Currently we are seeing
several other specializations like PR, Activation,
Digital, Design also getting their due. But in the
long term we may see some level of harmonising
of these eight - ten agents into a more
manageable set of three- four.
Rural marketing is becoming the next frontier of

growth as existing media houses are developing
in-house capabilities and specialised agencies have
come up to serve the needs of advertisers to reach
audiences in rural areas. Aegis Media has launched
Carat Fresh rural, a rural communications agency,
which is the rural division of Carat Fresh Integrated.
It provides services like rural planning, implementing
- Dr. MG Parameswaran
Advisor,
Draftfcb + Ulka
Dealing with fewer agencies v/s multiple agencies

Dealing with 1 to 2 agencies
Dealing with multiple agencies
High dependency on one agency
Reduce the dependence of advertisers on one agency
Multiple services from a single agency come at an increased cost
Advertisers have high bargaining powers so their services

come at a relatively lesser cost
Involves lesser fixed operating cost
Managing multiple agencies increases fixed operating cost
Ideas and expertise available might be limited
Exposure to more ideas and expertise
Ad agencies are treated as business partners
Ad agencies are treated as vendors
Handling 1 to 2 agencies is easier
Handling multiple agencies can be chaotic and difficult to

produce a homogeneous integrated campaign across multiple
platforms
46. The Economic Times, 24 February 2014

47. The Hindu Business Line, 17 December 2013
Regulation
Conclusion
A significant section of the society is influenced by

advertisements appearing on Television, Print and Radio
which drive their purchasing behaviour. Internet is also
influencing the buying behaviour of the customer making
him more aware about brands and products available in
the market. Due to competition among the national and
international brands in the market, advertisers are trying
to break the clutter by luring customers with attractive
offering. This might result in advertisers making false
claims and providing misleading information to the
customers. Misleading advertisements result in unfair
competition, litigation and increased dissatisfaction
amongst consumers. The industry is currently selfregulated. There has been an ongoing debate over
whether there is need for more stringent regulations.
The responsibility for regulating advertisements comes
under the purview of Advertising Standards Council
of India (ASCI) in India, which acts as an independent
self-regulatory body. However, due to the lack of law
enforcement powers, ensuring compliance tends to be
a challenge for ASCI. There were concerns raised by the
Department of Consumer Affairs (DCA), a Government
body, challenging ASCIs effectiveness. Discussions about
government intervention in the form of legislative control
are still underway49.
Year 2014 is expected to perform better than 2013 with

an expected advertising revenue growth rate of 13.1 per
cent50 Significant amount of growth in ADEx is expected
to come from General assembly elections alone. Other
areas to look for would be automobiles as the sector is
lined up with couple of new launches this year and BFSI
which is expected to grow in the second half due to
expected change in policies post election. Digital media is
expected to continue its growth trajectory with projected
growth rate of 36.9 per cent in 201450. TV, Print, Radio and
OOH are also expected to perform better in 2014 with
projected growth rate of 11.9 per cent, 10.1 per cent,
13.7 per cent and 10 per cent respectively50. ATL: BTL
ratio is expected to reach 50:50 by 2015, as companies
are expected to spend on marketing activities in rural
areas (dominated by BTL activities) to push their sales51.
Technology is already taking advertising to a whole new
level as advertisers are integrating Augmented Reality
(AR) solutions with their campaigns to enhance customer
interaction with their brands. On the agency side, media
agencies are moving towards consolidation phase where
media buying and planning agencies are acquiring full
service digital agencies to help clients carry out cross
platform integrated campaigns to reach their audiences
through multiple touchpoints.
Strengths, initiatives and challenges

Strengths and initiatives
Challenges faced
ASCI has a balanced

organizational structure
ASCI is restricted in its
representatives from advertisers, enforcement powers due
agencies, media etc belonging to to lack of legal backing
the industry and civil society
ASCI codes are based on
international codes such as
the International Chamber of
Commerces Code of Advertising
and Marketing Communication
Practice and European
Advertising Standards Alliance
Awareness about ASCI

on a wider scale needs
to be created. ASCI
also needs to create
awareness among rural
consumers who are
more vulnerable than the
educated class
Copy Advice: it comprises of

non-binding advice provided
to the member before the
launch of an advertisement
stating whether or not the
advertisement complies with
ASCI code and government rules
Exposure to more ideas

and expertise The
process of intimation
and retribution in
the ASCI needs to be
more structured and
transparent
The ASCI does not seem

Fast track system is established to have a clear cut
to cater to intra-industry cases or strategy for monitoring
member-to-member complaints. the digital platforms.
With the digital wave
Decision making time takes
hitting every aspect
around 7 working days as
of the industry, it is
opposed to 30 days in normal
imperative that ASCI
cases
broadens its horizons to
cover the digital aspect
Source: Advertising Standards Council of India, www.ascionline.org
49. Advertising Standards Council of India, www.ascionline.org

214
12
Live Events
Taking centre stage
From its origins in stage construction, artist management

and event coordination to the business of experiences,
the live events sector in India has come a long way. It
is a unique vertical within the media and entertainment
industry; an industry in its own right that has emerged
out of a confluence of different verticals such as music,
television, broadcasting, advertising, print and radio. With
growing importance on experiential channels to connect
with audiences and target groups, live events in India has
thrived in the recent years.
For the purpose of this report, live events has been
defined to include corporate events and brand activation,
Meeting, Incentives, Conference and Exhibitions
(MICE) and trade shows, and IP-driven events such
as festivals and live performances including televised
stage performances; however, this report excludes the
social events sub sector weddings, birth and marriage
anniversaries, personal events and sports events but we
have carried an external point of view on wedding space
in this report. Though very large in terms of industry size
and market activity, the social events sub sector is highly
fragmented and unorganised. Sports events such as the
Indian Premier League, Mumbai Marathon, Hockey India
League and Indian Badminton League are mostly still
emerging and primarily TV driven and have been excluded
due to unavailability of consistent data.
2013 marked a clear slowdown for the live events sector.
Coming on the back of a slowing economy in 2012, CY
2013 witnessed growth of a mere 8-10 per cent over
the previous year01. For an industry which exhibited
growth rates of more than 20 per cent YoY between
2008 and 201201, the past two years have indeed been
a time for consolidation, renewal and fresh thinking.
The primary reasons for this slowdown have been the
rupee depreciation (thereby affecting outbound MICE),
general economic stagnation (therefore lower corporate
and advertising spends), rapidly rising artist and talent
costs, and continuing lack of infrastructure in the country
(inbound MICE could not take advantage of the Rupee
depreciation). However the emergence and ongoing
strength of serious and credible IP-events such as Jaipur
Litfest, NH7, Sunburn, IIFA and the Filmfare Awards
showed promise and generally uplifted the sector.
The sector has experienced some defining changes
in recent times: IP-events, brand and community
building through experiential initiatives and niche event
management capability are a few of them. While it
remains a fairly unorganised and fragmented business
with many small and new operators continuing to
mushroom there are around eight to ten emerging
players of national scale. Growth, despite the shortterm slowdown, does not seem to be a challenge at
the moment; and this should attract more strategic and
financial investors to this segment.
01.
Industry discussions conducted by KPMG in India
The industry maturity model

Maturity Metrics
Indian Live Events
Performance measurement
Poor
Corporate governance
Somewhat defined
Topline
Fair
Scalability
Good
Spend on innovation
Moderate
Clientele
Sustainable
Focus on cost reduction
Good
Focus on cost removal
Poor
Risk management
Somewhat defined
Skill building and retention
Poor
Fragmentation
High
Growth
High
The industry has made a lot of progress in

developing processes, intellectual properties
and workforce capabilities. Major industry
players have developed their own areas of
operation. However, the industry is still young
and very fragmented - far from maturity but we
are confident that we would see a major spurt of
growth in future.
- Sameer Tobaccowala
CEO,
Shobiz Experiential Communications
216
Industry evolution
Industry evolution
1990: Mainly venue management, artist coordination and

equipment sourcing
1995: Managed events pick up (led by organisation of
large-scale social events)
Revenue
217
2010
1990
1995
2000
2000: Emergence of a few organised players

(consolidation of mom-n-pop shops into partnerships and
privately-held companies)
2015
2005
2005: Corporate events pick up pace leading to six years

of high growth
Maturity Levels
Chaotic
Tactical
Focused
Strategic
Optimising
2008: Increased importance of IP and formation of

the first event properties from within the live events
community
2013: Corporate slowdown leading to churn,
diversification and skill renewal
2015: Could see niche capability building, major

consolidation, strategic partnership and revenue sharing
leading to robust and sustainable growth.
Major stakeholders in the ecosystem
Government
Venue Provider
Insurance Provider
Accidental
Equipment
Event Production and

Shareholders
Logistics Provider
Sponsors and Advertisers
Event Management/Advisory
Marketing
Event Operations
Finance
Technical Service Provider

Light
Sound
Power
Broadcasting
Media and Broadcasting

Digital
Print
Other
Operating Crew
Sales
Creative Team
Ticketing
Crowd Management
Setup
Performers/Representatives
Audience/Target Group
However, partnerships may often increase complexities of

the events. Some of the major drawbacks being;
The lack of a scientific measurement system
is certainly hurting the experiential marketing
industry. But there seems to be no global
precedence either. No wonder live events especially Bollywood performances and award
shows - backed by TV broadcasters are growing
in flavour with advertisers.
- Sabbas Joseph
Director,
Wizcraft International Entertainment Pvt Ltd
One of the key characteristics of the sector continues

to be collaborative partnerships. The typical value chain
involves more than five partners working on specific areas
of the event. While some event management companies
have developed their own in-house skills, others have
joined hands with specialised service providers and
vendors. This has helped companies to leverage on
certain unique benefits.
Increased
coordination
Coordination is essential to make the whole

collaborative set up work, and it takes up most of the
time of event managers.
Quality concerns
Local vendors do not always live up to the quality

standards of the event firm or client.
Limited
control over
procurement
Procurement function may be outsourced to a third

party vendor and the event firm may not have direct
control over it.
Concern of
inconsistent
experience
Due to the difference in the vendors across the

country, quality and consistency may change across
venues and locations.
Nonhomogeneous
safety standards
Safety standards also vary between different

stakeholders in the collaboration.
Legal issues
Legal issues, contracts and paperwork, and

subsequent litigation between different stakeholders
may also incur additional cost.
Decoupled
business
processes
Separation of different functions of an event such as

venue management, logistics, obtaining regulatory
clearances, etc.
Lower capital
investments
Event management companies may not need to

invest in auxiliary services such as logistics and
venue management.
Niche skill
development
In a collaborative partnership, every partner brings

certain niche skills to the table. Hence, they stand to
gain expertise in respective areas of operation.
Improved cash
flow
Outsourcing to third party vendors help in reducing

expenditure in non-core activities such as venue
setup, waste management, etc.
Lower entry
barriers
Power of collaboration helps new companies

venture into this business with low upfront capital
investment.
Lower cost
of human
resources
It becomes easy for the event management firm

as they do not have to maintain a big crew in their
payroll.
Our industry discussions indicate no major changes in

the co-operative model in the near future, while niche
capability building would continue to evolve as a
priority. Some sector players are even positive about
revenue sharing models with the service providers
and stakeholders in the value chain. The industry
would continue to see more collaboration and major
consolidation among service providers in the future.
We like to define the business we are in as the

business of branded content for communities.
The three key elements are a strong brand,
expert and niche content and strong
relationships with communities. Live events are
becoming an important focus area for magazines
as they combine a strong brand with community
relationships to produce distinctive and
differentiated events that other media are unable
to produce. These events help us increase our
audience and also allow the sponsor brands to
interact with their target audiences. We amplify
these events through social media, coverage on
television channels and of course, through our
magazines.
- Tarun Rai
CEO,
Worldwide Media
218
219
Segments of the live events

sector
The intellectual property

events business
From the business model and type of clients served, the

three prominent sub sectors are:
The business model for IP-events is conceiving and

creating a brand around an event. Over a period of time
the brand develops an identity, acquires brand value,
and becomes a pull factor in its own right. The IP-event
business is among the fastest growing segments for
many Live Event firms today.
IP Events
Experiential
marketing
Business model
Clientele
The event management

company invests in building
a brand around a signature
event mostly around
music, literature and art,
sports, entertainment,
fashion or business.
The defined target

audience (B2C) and
sponsors and advertisers
seeking to connect with
that audience.
Below the line promotions,

advertising campaigns,
product or brand or film
launches, and personalised
experiences designed to
drive sales and enhance
brand experience. The rural
segment is large.
Product, service and

experiential brands in
FMCG, telecom, film,
TV shows, auto, foods,
healthcare, technology,
etc.
Corporate and industry

trade shows, meetings,
incentives, conferences
and exhibitions in bound
or out bound or domestic
covering business tourism.
MICE and
Trade shows
Size of the live events business in India
Conceive
Integrate with
firm's core
brand
proposition
Differentiate
from existing
events
Check
Companies, divisions
and brands of companies,
industry bodies and
associations.
operational
and financial
feasibility
Create
Create IPs
such as brand
name, logo,
theme etc.
Identify the
stakeholders
Design the
main and
auxiliary
events
Create the
Execute
Logistics
Venue
management
Risk
management
Monetise the
brand
Make the
brand
sustainable
brand buzz
through
targeted
marketing

Size of the live events market

in India
Size of the live events market in India
(Figures in billion INR)
25
30%
25%
20
20
20
25%
22%
20%
15
15
12
10
11
15%
9.5
10%
8%
5%
0
IP Events
Growth over 2012
EM
5%
5%
0%
0%
MICE & TS
Forecast for 2014
The major sources of revenue for an IP-event include: (a)

Sponsorship, (b) Gate Receipts and (c) Broadcast Rights.
The revenue mix varies for each event and there seems to
be no settled formula yet. Many properties thrive on the
pocket-money economy to drive ticket sales; for others,
sponsorship and broadcast rights are major sources.
For example, the main Sunburn event in Goa gets up to
70 per cent of its revenue from gate receipts and 25 per
cent from sponsorship, and for NH7 Weekender it is 35
per cent and 65 per cent respectively; while film-related
events such as Filmfare Awards and IIFA have a 50-50 split
between sponsorship and TV rights.02
Events such as the Jaipur Litfest and Kala Ghoda Arts
Festivals derive almost 75 per cent of their revenue
from sponsorship.02 Conversely, the Russell Peters
Comedy Tour in India collected almost 90 per cent of its
revenue through gate receipts. At international festivals,
merchandising and concessionaire revenue is often a
robust way to monetise the IP, but in India it is a marketing
expense to most IP-owners due to availability of pirated,
cheap substitutes.
On the cost side, artists and entertainers make up 50-60

per cent of the total cost, followed by venue management
(including stage, art and dcor) and marketing at 15 per
cent each.03 Rising artist costs is a major concern (coupled
with escalating cost of international acts due to Rupee
depreciation), leading to several partnership breakdowns
in 2013. Taxation at the state and customs level is
another major cash flow constraint. Besides that, local
permission challenges and restriction on sponsorship by
liquor and tobacco companies may also need immediate
attention from the government for continued growth.
In 2013 the major Live Event companies, radio stations,
newspaper and magazine publications, TV broadcasters
and fashion agencies taken together have organised 150160 IP-events across the country; with live music festivals
and programmes accounting for 55-60 of such events.
Most of the music events folk, fusion, rock and EDM
in the past have chased the same audience: 1.5-2 million
highly urban, SEC A+ and in the 15-35 age group.03
to have found their event-to-brand fit and are more

seriously investing in these properties. Televised stage
performances especially those that are housed in award
shows such as Filmfare, IIFA, Mirchi Music and Life OK
Screen Awards continued to attract bigger sponsors and
higher TV revenue for the IP-owner. The use of A-list stars
as performers and anchors, and high decibel promotion
of these performances as tentpole TV events, kept an
increasing TV audience glued to their screens driving
TRPs.
In 2014 there seems to be concerted effort to expand
the audience through spinoffs and IP-events in Tier II
cities, the Northeast, and college-town locations. As the
audience grows, many event owners are reaching out
successfully to non-traditional advertisers, niche brands
and local (real estate, retail and jewelry) brands to support
IP-events.
In 2013 IP-events led the growth for the live events

sector. Growth was coming from various quarters,
which include: (i) more events as a larger number of Live
Event companies plunged into the IP-events space and
categories expanded from film awards, music, fashion
and literature into art, business and real estate, auto
and lifestyle; (ii) higher ticket prices. Pricing of tickets
in IP-events, especially in music and comedy seemed
to support 25-30 per cent increase over 201203; and (iii)
entry of more serious and strategic sponsors. After
the initial years of experimenting, sponsors seemed
Multiple IPs, all with similar content have only

created confusion. Only IPs with a strong
brand story and unique, but specific consumer
experience will survive and grow.
- Karishma Hundalani
Head - Brand and Content,
EVENTFAQS Media Pvt. Ltd.
Some of the prominent events

Event
Property Owner
Date
Location
Details
Sunburn Goa 2013 Festival04
Percept
27-29 Dec 2013
Goa, India
Running for the 7th year, this years event

was hosted at the Vagator Beach in Goa. The
main sponsor was Hero MotoCorp.
Bacardi NH7 Weekender

Pune05
OML
18-20 Oct 2013
Pune, India
The Pune chapter of NH7 Weekender was

hosted in Laxmi Lawns. Bacardi India was
the main sponsor for the event.
Jaipur Litfest06
TeamWork
17-21 Jan 2014
Jaipur, India
More than 240 authors participated in the

five day event. Zee Entertainment was the
main sponsor of the event.
Mahindra Blues Festival07
Mahindra/Fountainhead
15-16 Feb 2014
Mumbai, India
This was the 4th edition of Asias largest

blues festival staged at Mehboob Studios,
Bandra.
CNBC TV 18 Indian Business

Leader Awards08
CNBC-TV18
13 Jan 2014
Mumbai, India
The 9th edition of the India Business Leader

Awards was hosted in Mumbai. Omkar
Realtors and Developers Pvt Ltd. was the
main sponsor of the event.
03.
04.
05.
06.

Sunburn Goa 2013 Website
Bacardi NH7 Weekender Pune 2013 Website
Jaipur Litfest Website
07. Mahindra Blues Festival Website

08. Article on Indian Television Website, 14 January 2014: http://www.indiantelevision.com/
television/tv-channels/news-broadcasting/cnbc-tv18-hosted-9th-edition-of-india-business-leaderawards-2013-140114
220
221
Event
Property Owner
Date
Location
Details
Filmfare Awards09
The Times Group
24 January, 2014
Mumbai, India
The 59th Filmfare Awards has hosted in Yash

Raj Studio in Mumbai. Idea was the main
sponsor of the event.
IIFA Awards10
Wizcraft
4-6 July, 2013
Macau, China
The 14th IIFA awards was hosted at The

Venetian Macao in Macau, China. The main
sponsor for the event was Tata Motors. The
15th IIFA is all set to be hosted in Tampa
Bay, USA.
Forbes India Leadership

Awards 201311
Forbes India
16 October, 2013
Mumbai, India
The 2013 edition of the Forbes ILA was

hosted at the Trident in Mumbai. Rolex and
Dia were the associate sponsors.
Lakm India Fashion Week

Winter 201312
Lakm and IMG Reliance
23-27 August, 2013
Mumbai, India
The LFW Winter 2013 was organised at The

Grand Hyatt Hotel, Mumbai. The event was
co-sponsored by Jabong.com and DHL.
EY Entrepreneur Of The Year

Award13
EY India
20 February, 2014
New Delhi, India
The 15th EY Entrepreneur of the Year award

was hosted at the Taj Palace in New Delhi.
India Bike Week14
70 EMG
17-18 January, 2014
Goa, India
IBW is built around bikes and biker

communities in India. The 2nd edition was
held in Goa in association with HarleyDavidson.
Kala Ghoda Arts Festival15
Kala Ghoda Association
1-9 February, 2014
Mumbai, India
The 9-day long, 16th KGAF was held in

Mumbai - in partnership with Hindustan
Times.
Sunburn currently has over 6.2 million fans globally

with over 120 events in just one year making
Sunburn Asias largest music festival brand. I truly
believe that Sunburn is of the fans, by the fans and
for the fans. Its time for all of us to live love and
dance.
- Shailendra Singh
Joint MD,
Percept Ltd.
09.
10.
11.
12.
Filmfare Website
IIFA Website
Forbes India Leadership Awards Website
Lakme Fashion Week Website
13. EY Website
14. India Bike Week Website
15. Kala Ghoda Association Website
Key advertisers and sponsors

National advertisers across categories such as FMCG,
consumer durables, mobile services and automobile
dominated the sector, followed by liquor companies,
financial services and traditional media organisations.
Traditional high spenders also dominated the live events
list of spenders: among them were Hero MotoCorp,
Micromax, Nokia, Airtel, Vodafone, Tata Motors, General
Motors and Hindustan Unilever (HUL). Banks and
insurance companies emerged as a major source of
sponsorships for IP-events, especially those organised
by TV broadcasters with business themes. Due to
government regulations, liquor brands took to IP-events
primarily music and fashion in a big way. This is expected
to accelerate as both client and event firm find a perfect

fit. Automotive brands stepped up their involvement in
live events, particularly film and music awards shows
and in experiential marketing, in the wake of the severe
slowdown in auto sales in 2013. Rural oriented IP-events
were driven by FMCG and consumer durables.
Below is an illustration of two shows the IIFA and the
Oscars to add some global perspective. The table below
is to exhibit different aspects of IP-events in terms of
scale and its various metrics.
A look at the shows IIFA and Oscars

The Oscars
IIFA
First Award
1929
2000
Awarded By
Academy of Motion Picture Arts and Sciences

(AMPAS)
International Indian Film Academy
Event IP Owner
AMPAS
Wizcraft International Entertainment Pvt. Ltd.
Current Number of Award

Categories
24 and 5 Special Categories
28 and 11 Special Categories
Ticket Price Range
By Invitation Only
USD350 - USD3300
TV Rights
ABC
STAR TV in India
Average TV Viewership
Around 40.3 million in USA and almost 1 billion

estimated worldwide16
Around 700 million worldwide17
Destination Pie
Only in USA
Only foreign locations
Related Events
Sci-Tech Awards, Governors Awards
IIFA Stomp, IIFA Film Workshop, IIFA Magic of the Movies and
Technical Awards, FICCI - IIFA Global Business Forum
Prominent Sponsors
Hyundai, JC Penny, Samsung, Coca-Cola,

American Express, and McDonalds18
Tata Motors, Videocon, PVR Cinemas, 93.5 Red FM, and Star Plus 19
The Global Viewership grew by 22 per cent compared to last

year21
IIFA has set foot in USA for the first time
Key Trends
Viewership is stagnating, grew by only 3

per cent in 2013 after declining in 2012,
however young viewership has increased
from 2012 20
The events have expanded from one day to three day event
New production team has been hired
There has been constant addition of categories over the years
The name of the event is now only The

Oscars
Showcasing Indian culture and tradition through dance

performance has been a prominent theme for this show
According to Wizcraft sources, the organisers and owners of the IIFA property, IIFA has grown into an INR 1.1 billion
plus annual business with margins of 22 per cent; and estimated to grow to INR 1.5 billion by 2015 with margins of
25 per cent.
16.
17.
Neisen Data for Oscars, 17 December 2013

IIFA viewership estimate published in StarPlus Website. http://www.starplus.in/iifa-2012/
iifalogins.aspx
18. Article on Broadcasting and Cable Website, 15 February 2012: http://www.broadcastingcable.
com/news/advertising-and-marketing/abc-reveals-oscar-sponsors/52819
19.
20.
21.
IIFA Website
Article on The New York Times Website, 25 February 2013: http://www.nytimes.com/2013/02/26/
movies/awardsseason/higher-ratings-and-controversy-for-seth-macfarlane-at-oscars.
html?pagewanted=2&_r=0
Statistics by TAM Media Research Pvt. Ltd
222
223
IIFA Destinations
IIFA Global viewership

300000
USA
250000
UAE
Macau
200000
Thailand
150000
South Africa
Sri Lanka
100000
Netherland
50000
Singapore
Malaysia
0
7/5/2009
Canada
7/11/2010
7/24/2011
7/7/2012
8/10/2013
U.K.
Global viewership
Source: IIFA Website
Source: TAM Media Research* (*Disclaimer: Copyright reserved with TAM MEDIA RESEARCH PVT.
LTD. any use of TAM Data or (derivative thereof) mentioned herein without express permission
of TAM shall be treated as illegal.)
Experiential Marketing (EM)

Experiential marketing has grown in importance for
most Indian corporates and advertisers. Be it Coca
Colas Small World Machines or Mahindra Monastery
Escape, businesses and brands across different verticals
are recognising the power of below the line marketing.
By creating an experience for the target consumers,
experiential marketing aims to deliver high levels of
engagement and customisation. This has been highly
effective in breaking through to the rural consumer
millions of new users that like to see, touch and feel a
product in the past decade.
Experiential marketing is typically effective - (i) in

case of products requiring higher degree of customer
involvement, and (ii) to supplement print, outdoor and
television advertising. The use of a captive environment to
create a brand experience for the customer is the USP of
this channel. Experiential marketing is closely integrated
with brand activation and engagement. This is one of the
most dynamic channels for the live events sector with
new engagement properties being created continuously,
especially in the rural segment.
Some of the prominent EM events in 2013

Event
Date
Location
Details
Coca-Cola Small World Machines22
May 2013
New Delhi
Small world vending machines with touchscreens were installed at malls

in India and Pakistan providing a live communication platform.
Maybelline Stay 14 Hour23
February
2013
Mumbai
Maybellines Super Stay 14 Hour campaign concluded in Phoenix mall,

Mumbai with a product launch.
Mahindra Monastery Escape24
August 2013
New Delhi to Leh
Convoy of 20 vehicles were driven from Delhi to Leh
Colorbar Pop up beauty zone25
November
2013
New Delhi
Colorbar created installations for free makeover and makeup consultation
Nick Junior Kid Town Fair26
December
2013
Mumbai
Nick Junior celebrated Childrens day at World Trade Center in Mumbai.

Footfalls estimated to be 25,000 across 2 days.
Puma - Race Off With Nico with

Cream Events27
October 2013
New Delhi
Fan meeting and F1 simulator racing with Formula 1 driver Nico Rosberg.
The event was held at Blue Frog in New Delhi.
Tupperware Care4Food Day28
April 2013
28 cities across India
Tupperwares campaign on reducing food wastage through promotion of

food storage habits.
Old Spice Mantastic Man

Campaign29
Nov 2013
Mumbai
P&G brand Old Spice celebrated International Mens Day with their Smell
Mantastic campaign.
22. Coca-Cola Website

23. Article on Eventfaqs Website, 26 February 2013: http://www.eventfaqs.com/eventfaqs/wcms/en/
home/news/Maybelline-India-launches-Supe-1361818744627.html
24. Mahindra Adventure Website
25. Article on Eventfaqs Website, 27 November 2013: http://www.eventfaqs.com/eventfaqs/wcms/
en/home/news/Colorbar-creates-pop-up-Beauty-1385525411295.html
26. Article on Eventfaqs Website, 2 December 2013: http://www.eventfaqs.com/eventfaqs/wcms/en/
home/news/Nick-Junior-engages-about-25-0-1385927908922.html
Article on Eventfaqs Website, 29 October 2013: http://www.eventfaqs.com/eventfaqs/wcms/en/
home/news/Puma-organizes-interactive-ric-1382993078889.html
28. Tupperware India Website Press Release, 8 Apr 2013
29. Article on Eventfaqs Website, 4 December 2013: http://www.eventfaqs.com/eventfaqs/wcms/en/
home/news/Old-Spice-celebrates-Internati-1386097976246.html
27.
The type of engagements can be classified into three

major clusters.
Brand activation: The complex logistics and deep
understanding of the brand are the major challenges
for an event firm working on an experiential marketing
programme. To run a consistent, integrated campaign
across the country and to provide similar brand
experiences can be difficult for this reason. This applies
equally to a product launch or film pre-release activity or
services brand activation.
Entertainment and lifestyle: It is often essential to make
the brand experience high on entertainment quotient.
Various factors like celebrity presence, high level of
audience engagement, element of fun, direct and tangible
benefits of participation are important.
Stakeholder engagement: If events are poorly managed
and dry, it could fail to make a mark and may have the
opposite effect on the target audience. Venue, dcor,
event flow and timing are other factors to look at while
designing the event. For corporate conferences, it is all
about the quality and quantity of attendees, and time
management. Audience acquisition and subsequent
sales growth are important new milestones at an event,
and some clients are evaluating event firms on these
parameters.
With the overall slowdown of the Indian economy,
experiential marketing spends of advertisers were hit,
and therefore it affected the event firms in 2013. Big
spenders in automobile, telecom, cement and steel,
consumer durables and infrastructure severely curtailed
their budgets; while sectors like financial services, FMCG,
healthcare and technology emerged as large clients.30
With depressed sentiment and the general elections
looming, the first half of 2014 is not expected to fare any
better. But event firms are hopeful that the latter half of
2014 and the following year can put this sub sector back
into high growth.
Rural marketing and election activation would

provide the next stimulus for growth of Indian
Live Events industry. Growth has already started
in Tier II and Tier III cities. With infrastructure
development, rural markets would also pick up
pace.
Below The Line (BTL) has gained considerable importance

in communicating a brands message. Our industry
discussions indicate a major change in advertising trends
over the past decade. In 2000, the advertising ratio for
major advertisers was 80:20 for Above The Line (ATL)
over BTL. According to the Rural Marketing Association
of India (RMAI) by 2015 this ratio is estimated to become
50:50. 2013 has been a growth year for BTL advertising31,
driven largely by rural spends. According to a book by R V
Rajan, BTL accounts for 80 per cent of the rural marketing
efforts in India.32 BTL channels are more effective in
rural areas where ATL advertising fail to reach the target
segments.
With rapidly rising incomes but much lower

levels of consumption and penetration, rural
markets will lead the India growth story in the
current decade.
- Pradeep Kashyap
CEO,
MART and President, RMAI
Penetration of mobile connections, improvement of road

access, and increase in rural TV households has changed
rural consumption patterns. Companies such as HUL,
Maruti, Hero MotoCorp, Dabur, Ghadi Detergent and LG
have with the assistance of BTL agencies made deep
inroads into the rural market using experiential marketing
strategies. 50 per cent of Hero MotoCorps and 33 per
cent of Marutis sales now come from the rural segment.
The Experiential Marketing Industry is growing

quite rapidly. However, to achieve quality
results, both Brand and agency need to invest
in the effort. This necessitates a partnership
approach rather than the current client-vendor
approach. A deeper understanding of the Brand
and its objectives, budgets, relevant creativity,
seamless execution of plans and measurability
of effectiveness will result in a win win.
- Brian Tellis
Chairman,
Fountainhead and President, EEMA
- Harjinder Singh
MD,
ShowWorks Eventz Private Limited
Under this scenario and sensing future growth potential

worldwide advertising and media groups are emerging
as buyers and aggregators for local Indian event firms.
Recent transactions involving G2/Grey and RC&M and
JWT-Encompass, among others, point to an increasing
trend.

32. Dont Flirt With Rural Marketing by R V Rajan
224
225
Meeting, Incentives, Conference and

Exhibitions (MICE) and Trade Shows
Business Tourism or MICE is a unique crossover between
live events and tourism industries. This is the most
globalised of sub sectors within live events. This business
is becoming very competitive both from a destination
and peer group perspective but was growing at over
25 per cent YoY between 2008 and 2012.33 Fuelled by a
competitive Rupee, incentives from international tourist
boards, fast globalising Indian companies, and good
economic growth, some event firms doubled revenue and
profits in a span of four years.
Both 2012 and 2013 saw a sobering of this frenetic pace.
But the industry is confident that this is a temporary lull
and double-digit growth should be back in 2014-15.
Number of events
While, the top five factors that clients are looking for
while choosing an appropriate venue are33:
Proximity to airport and accessibility
Infrastructure
Active Tourism Board and Hassle-free VISA Regulations
Tourist Attractions
Climate
As per International Congress and Convention

Associations (ICCA) statistics, Healthcare is a leading
MICE and Trade Show consumer with almost 17 per cent
share, followed by Technology (14.5 per cent) and Science
(13 per cent). The choice of venue is much skewed
towards hotels (44 per cent)35:
Preferred venue
14,000
9%
Other
12,000
10,000
8,000
23%
University
6,000
4,000
24%
Exhibition Centre
2,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: ICCA Website and ICCA Statistics Report 2002-2011
As per ICCA rankings, the top ten destinations for MICE

industry are34:
1. Vienna
2. Paris
3. Berlin
4. Madrid
5. Barcelona
6. London
7. Singapore
8. Copenhagen
9. Istanbul
10. Amsterdam

34. ICCA Website
35. ICCA Press Release 19 September 2013, A Modern History of International Association
Meetings
44%
Hotels
Key trends
meetings are getting shorter with average length of
events decreasing
frequency of meetings is increasing year on year

the average fee per guest is increasing steadily.
The United States, Germany, Spain, United Kingdom and

France continue to be the preferred host countries with
more than 25 per cent combined market share.36 The
MICE industry also has a direct impact on the travel and
tourism industry of a country; and hence governments
across the globe are trying to promote this industry by
providing investments in infrastructure and hospitality.
In most parts of the world, MICE and trade show venues
were primarily tourist venues that eventually built
conference capabilities. Unfortunately in India, the lack of
infrastructure, lack of plug-and-play venues, shortage of
hotel rooms and perceived lack of government support
could be hampering the growth of this lucrative business.
The MICE business is growing rapidly in Asia and Middle
East, outperforming all other markets. As per ICCA
rankings, the top five Asian destinations36 are Singapore,
Beijing, Seoul, Taipei and Kuala Lumpur. Singapore has
made it to the global top ten MICE destinations with
an impressive list of big events such as The Singapore
Airshow (Asias largest, Feb 201437), World Gourmet
Summit (Apr 201438), World Cities Summit (June 201439),
World Architecture Festival (Oct 201440), Asian SEA
Games (201541) and many more.
MICE in India is still at a very early stage compared to its
Asian or BRIC peers. According to a recent publication,
out of 400,000 events worth USD280 billion, India only
accounts for USD4.8 billion in the MICE market.42 As
per ICCA statistics, India is set to host more than 5,300
meetings this year.43 The India Convention Promotion
Bureau (ICPB) was set up in 1988 by the Ministry of
Tourism, Government of India, to promote India as an
attractive MICE destination. ICPB supports its members
with free information and infrastructural assistance to
host conventions and other MICE events. ICPB also
acts as the ambassador of Indian MICE industry. The
Incredible India campaign44 designed by ICPB and recent
visa relaxation regime are laudable steps in that direction.
As per ICCA statistics, the top four MICE destinations
in India are NCR, followed by Mumbai, Bengaluru
and Hyderabad.36 Political instabilities have affected
Hyderabad; as Hyderabad International Convention
Centre (HICC) slipped two positions due to the talks of
proposed bifurcation of Andhra Pradesh.45 The lack of
direct international flights, except to Mumbai and Delhi,
is also restricting the growth of other cities and tourist
centers as MICE destination.
The outbound MICE segment is growing rapidly in India,
despite the comparative slowdown in 2012-13. With 1.51.8 million outbound MICE travelers every year Germany,
Singapore and Thailand are among the top destinations
36. ICCA Press Release 19 September 2013, A Modern History of International Association
Meetings
37. Singapore Airshow Website
38. World Gourmet Summit Website
39. World Cities Summit Website
40. World Architectural Festival Website
for outbound travelers.42 However, the outbound MICE

market continues to be fragmented, with tour operators
and travel agencies sometimes doubling up as event
firms. A key challenge remains in the skill front with
lack of professional education in hospitality and event
management specialisations, and the inability of smaller
event firms to scale up and manage large, complex, multilocation MICE activity.
The recent Rupee depreciation may also have impacted
outbound MICE events. Some key players have reported
to have lost a few outbound events or have been forced
to convert into domestic events. Another limiting factor
for outbound MICE could be the unavailability of Indian
food for Indian delegates. Finding good quality Indian
food in global destinations is a challenge. Finally, the tax
regime of 12.5 per cent luxury tax, wherever applicable,
and 12.36 per cent service tax on banquet halls, 13.5 per
cent VAT and 8.65 per cent service tax on F&B is making
the business uncompetitive. All this at a time when direct
corporate spending on MICE and trade shows have fallen
by 15 per cent between 2012 and 2013. The Live Event
firms are facing cash flow constraints arising out of longer
payment cycles from clients, lower operating margins,
and higher tax outflows.
Most of the MICE event firms have witnessed

increased pressure on cash flows in 2013 as
corporate margins came down due to financial
crisis and employee cost kept climbing. Dollar
appreciation also caused a few outbound events
to convert into domestic ones. The growth in
MICE segment is low at the moment but 2014
looks slightly better than 2013.
- Harish Babu
MD,
Impresario Event Management India Ltd
Venue infrastructure is the biggest challenge for MICE

and trade shows in India. There are only a few world class
venues in India HICC in Hyderabad, Vigyan Bhawan in
New Delhi, Renaissance Hotel in Mumbai, etc but these
fall woefully short during the peak winter months. Some
hotel chains such as Taj, ITC, Hyatt, Oberoi and Marriott
also provide convention facilities. However hotel chains
prefer the high margin wedding market and these venues
are often not available for large MICE or trade show
events. Pragati Maidan in New Delhi, MMRDA Grounds
and Bombay Convention and Exhibition Centre in Mumbai
and Palace Grounds in Bengaluru have become de facto
open-air exhibition centers. With few good permanent
and plug-and-play venues available, the event firm has
to spend considerable effort on non-value added activity
such as logistics, venue set up and dismantling.
41.
42.
43.
44.
45.
Olympic Council of Asia Website

Article on MICE Tourism, Outlook Business, 1 March 2014 Issue
ICCA Asia Pacific Chapter Website
ICPB Website
Bifurcation talk impacts MICE industry, The Hindu, 27 January 2014
226
227
Trade shows constitute a significant component of

business of most event firms. The Auto Expo 2014 gave
the sector a very strong start to the current year. Over
30 automobile companies spent an average of INR120
million each benefitting firms and service providers across
the value chain in the live events ecosystem. India hosts
an estimated 1,200 trade shows every year of which 100
are of international standard and attract foreign visitors.
Primary sectors are Information Technology (IT), real
estate and building materials, pharmaceutical, auto and
auto components, and plastics and chemicals.
Challenges for the industry

Venue and infrastructure
Target group experience - whether B2B or B2C - can
determine the success of any live event; apart from
content, the other major quality differentiator is
the infrastructure of the event. However, quality of
infrastructure in India often leaves a lot to be desired. Our
industry interactions suggested that some of the most
discussed concerns are:
Power Generation
Security of the
Performers
Adequate Seating
Logistics
Operational
Efficiency
Sanitation
Safety of the
equipment
Prime Location
Lack of Plug and

Play Systems
Low
Medium
High
The manpower challenge

Skill The industry is mostly unorganised and so is the
labour force driving it. Finding staff with proper skills
covering ideation, design, production, logistics, technical
understanding of sound and light, stage and venue
management, artist management and local knowledge
and experience can be very tough. Specialised courses
for skill development of event management professionals
are rare. On-job training is often most preferred, and
possibly the only option for almost all companies.
Employee cost Employee costs are 30-40 per cent of
the total fixed costs46 of an event firm since success of
project execution and management is entirely people
driven. The boom years of 2008-2012 saw consistent
double-digit pay hikes as event firms scrambled to hire
and retain talent. Rampant poaching by competitors and
allied industries such as tourism and television drove
up employee cost and resulted in several firms becoming

uncompetitive when the showdown hit in 2012.46
Attrition Attrition is another big concern. Our industry
discussions indicates the live events sector has
witnessed an attrition rate as high as 15 per cent in the
recent years46 as salaries froze and projects dried up. Live
events is still not seen as a viable and sustainable career
option; youngsters tend to see it as a steppingstone to
careers in advertising, film or television. While some
employees switch jobs for pay hikes, some start their own
ventures leading to further fragmentation of the sector.
Under the aegis of Event and Entertainment Management
Association (EEMA), an initiative similar to what
has been done in the technology sector to create an
employee database, introduce anti-poaching policies,
and generally get organised with industry-wide training
schemes, promote live events as a career choice, and
certification programmes are very necessary to address
employee issues.
Compared with industries like Film, TV or

Advertising live events is a very nascent
industry. However, given that the medium offers
everything others do not - direct messaging,
targeted audiences, experiential journeys and
measurable results, I hope it wont take long
for our clients to treat us with as much respect
as other established media like advertising.
Besides, with IPs taking center stage, Live
Events is fast becoming a 360 degree industry
by itself. Film and photography, script and
creative, advertising, sound, broadcasting - it
has footprints in all segments. Hopefully, this will
help us attract and retain quality talent in future.
- Oum Pradutt
MD,
Phase1 Events & Entertainment Pvt Ltd
Taxation bugbear
Other Indirect Taxes
Entertainment Tax
Apart from these, customs duty is also applicable at

0-150 per cent ad valorem or specific. ATA Carnet allows
exemption on customs duty and is applicable only for
goods imported for exhibitions on temporary basis. Value
added tax is also applicable for sale of merchandise.
Stamp duty is paid on the lease of assets, rentals and on
grant of television rights.
Entertainment tax is a state tax applicable to live events

such as commercial exhibitions, stage shows, sports
events, live entertainment, etc. with variable rates across
different states:47
State
Entertainment Tax
Jharkhand
110%
Uttar Pradesh
60%
Bihar
50%
Maharashtra
45%
Haryana
30%
Karnataka
30%
West Bengal
30%
Kerala
30%
Orissa
25%
Gujarat
20%
Delhi
20%
Andhra Pradesh
20%
Madhya Pradesh
20%
Tamil Nadu
15%
Punjab, Rajasthan, Assam, Uttaranchal,

Jammu & Kashmir and Himachal Pradesh
Nil
The varying rates increase the complexity for pan-India

event firms. The 2013 central budget has also imposed a
25 per cent entertainment tax on ticketed mega events
with a crowd of 2000 or more people; and sports events
with entry fee of INR 500 or more will attract a 10 per
cent entertainment tax.48 Recently, the UP Government
filed a writ petition to Supreme Court for permission
to reverse the waiver of entertainment tax on Jaypee
Sports International for Indian F1 Grand Prix event. The
withdrawal would cost Jaypee a sum of INR250 million.49
Service Tax
An effective rate for service tax of 12.36 per cent is
effective since 1 July, 2012. Service tax is applicable on
income earned from sponsorship and telecast rights.
47.
48.
http://www.filmtvguildindia.org/entertainment_tax_in_various_states.html, 5 March 2014

Ahead of EDM fests, govt imposes 25per cent entertainment tax, The Times of India, 27
December 2013
49. UP government withdraws entertainment tax exemption to F1, The Times of India, 22 October
2013
Direct Taxes
Revenues from granting live telecast rights
Event Management Fee
Sponsorship fee
Indian and Non-Indian Performers
The plethora of taxes both at state and central level

make live events uncompetitive in India when compared
to destinations such as the UAE, Sri Lanka and Thailand.
All three sub segments have called for harmonisation and
lowering of taxes; making the argument that tax efficiency
could result in higher collections and greater trickle
down for other businesses such as logistics, tourism,
hospitality, Small and Medium sized Enterprises (SME)
and individual contractors, F&B, and airlines.
Multiple taxes and irrational tax structure is

hurting the events business. Both state and
central government need to urgently review this,
and put in place a favorable regime to enable
India to be competitive in the world events
market.
- Rajesh Varma
Managing Director,
CRI Events Pvt Ltd
228
Regulatory delays
Obtaining licenses and permissions can take a lot of time
and effort in India. The major reasons for this include
complexity, uncertainty and inconsistency across various
states and districts. Attending issues like political mood,
local corruption, cultural habits and moral policing, and
freebie demand can make live events a tough business to
operate. This could end up adding costs and challenges,
and many event firms privately admit that such
management issues take away 35-40 per cent of their
time and effort.50
The regulatory challenges are even higher for a live
performance and ticketed events such as Sunburn,
Mahindra Blues or NH7 Weekender. A recent event in
Goa an EDM JV between a large studio and prominent
VJ supposedly went through 21 permissions to organise
the three day festival. An array of permissions required for
events are:
Fragmented markets, very high

competitiveness
By the nature of the sector, it falls between the quadrants
of professional service and service shop in the service
matrix. This indicates that differentiation and customised
solutions are key characteristics of the service provided:
Degree of Labour Intensity
229
High
Mass Service
Professional Service
Live Events
Low
Music license (PPL)

Venue license
Traffic police permission
Service Factory
Service Shop
Low
High
Degree of Interaction and Customisation
Safety and security permission from the police

Permission from local fire department
Tax payments
Customs duties
Visas and entry-exit permissions of talent
In many cases environment clearances (for noise, etc.)
Single window clearance is absolutely essential

for the industry today. It helps us plan and
manage the events more effectively.
- Mohammed Morani
Director,
Cineyug Group of Companies
Low entry barriers and presence of decoupled service

providers have likely catalysed fragmentation. With
fragmentation can come high degree of competition.
EEMA estimates that over 12,000 full time event firms
operate in India: ranging from the large and organised,
to divisions of larger media agencies, to mom-n-pop
shops, to in-house specialists, and right up to one man
coordinators. The sector is witnessing fierce price
competition in all sub segments. The bright spot in this:
niche firms have emerged to offer specialised services or
properties in one or two sub segments, thereby leading to
greater skill development and client stickiness.
Event firms frequently complain that corporate clients do
not value the idea and go with lowest cost providers. It is
also common to have breakaway groups from larger firms
walk out with a client or project on the basis of lower cost
quotations. The cost-plus-fee model may need to evolve
towards an integrated fee or monthly retainer model
for the sector to realise its creative contribution and
economic value.
There is a need for major consolidation and intellectual
property development. The industry anticipates, in the
next two to three years, the emergence of eight to ten
well-capitalised and serious players in each of the three
Live Event verticals. This group of about 30 players could
form the basis for industry consolidation by 2020 leading
to professional management, and better margins, topline,
visibility, bargaining and pricing power setting the stage
for rapid growth in the next decade.
Trends
2014 could be a slightly better year
All industry players we had interacted with are cautiously
positive about 2014. Some firms have added more than
25 per cent business in their pipeline, skewed towards
the latter half of the year.51 The economic slowdown,
which compelled some event firms to diversify into social
events, especially in last couple of years, seems to be
lifting. With higher spending on rural BTL, increasing
importance of IP led events, and rebound in outbound
MICE, this year looks positive across various segments.
IP-events is the future

90 per cent of our respondents agreed that IP-events
are the future of this industry.51 Many event firms are
investing considerably in building IP and monetising
them. While substantial capital investments are required
up-front and the gestation period is long, the IP segment
has shown the best ROI and profitable growth. Properties
such as Sunburn, Filmfare, NH7, Jaipur Litfest, Lakme
Fashion Week and IIFA are well established now, and can
be seen as role models for other IP-event initiatives.
In experiential marketing and MICE/Trade Show
segments, some event firms are moving from selfmanaged to outsourced models. The non-value added
part is being outsourced to third party vendors and event
service providers while these firms are concentrating
on brand-building, enhancing the experience, and client
engagement.
IPs are creating a community

Sunburn, India Bike Week, Kala Ghoda Arts Festival, NH7
Weekender, Outlook Traveller Awards, IIFA, Femina Miss
India and Filmfare these are just a few examples of how
event management firms are consciously trying to build
a community around their event properties focused on
brand, content and experience.
Reach
Digital
Print
Below the line
Reaching out to global destinations

Our industry interactions indicate International events and
outbound MICE are going to be the major growth drivers.
For big corporate groups with an employee base scattered
all over the world global conferences and conventions are
essential. Dollar denominated income for some of these
corporations somewhat offset the fall in the Rupee. At the
same time, Indian events especially film and music are
looking to explore global venues to increase awareness of
Indian culture, tap the South Asian diaspora, and thereby
increase the target audience. Some properties have set
up permanent event destinations abroad through strategic
tie-ups with local authorities and venue providers.
Permanent venues are being set up

Large and serious event firms are making a steady move
towards setting up permanent live entertainment venues.
While theme park and entertainment center operators
are growing at a fast clip Adalbs Imagica, EsselWorld,
KidZania, PVR Blu-O and Comedy Store music and
Broadway-style live entertainment venues are not too
far behind. The Wizcraft promoted Kingdom of Dreams
in Gurgaon has completed 300 shows over the past six
years, and is expected to breakeven in 2014-15; very soon
a Mumbai operation is expected to open. A large part of
the Live Event business especially music is played out
at nightclubs every weekend. Consisting of live rock and
fusion performances, standup comedy shows, Bollywood
DJ-fare and EDM, nightclubs across the Top 20 cities see
healthy business weekend after weekend. While difficult
to estimate size of this market, it is a major contributor to
artist incomes, F&B sales, and tourism.
Profits are likely to grow at a healthy rate
Customer engagement model
Draw
Differentiation
Place
Price
Community building has two distinct benefits a. repeat

visit, b. self-sustained PR. The community can sustain
the gate receipt revenue year on year; providing the
foundation for incremental growth. Community building
also helps in attracting sponsors or broadcasters as the
target audiences become well defined over time.
Sustain
Feedback
Blog & PR
Variety
Profit growth is likely to be steady with a good pipeline

of events in 2014. IP and MICE segments are expected
to be outperforming all other segments in profit growth.
The belt tightening during 2012-13, focus on higher
margin business, focus on IP-events, return to quality
consciousness over cost by the client, and past
investments in skill and hardware are all starting to show
from this year, especially for the larger players. The Top 20
event firms expect to see profit margin expansion from 13
per cent to 20 per cent over the next two years.51
51.
230
231
Digital platforms to impact the way business

is done
Digital platforms play a crucial role in customer
engagement and are rapidly helping the sector across the
value chain.
Industry wish list

Single window clearance for all regulatory
permissions
User convenience is greater and less staff required at
The industry today may need a single window for

obtaining all regulatory clearances for an event. A lot
of effort goes into non-value added activities such as
obtaining Public Performance License (PPL), import
approvals, and NOCs from different authorities. A single
window can reduce the complexity, delay and uncertainty.
Broadcasting
Increasing number of quality venues
Many event management firms are looking to explore
The industry also may need more venues of international

standards such as HICC, NSCI and Buddha International
Circuit. World class venues help event firms to put up a
good show. Venues of world class standard could also
help in boosting Indias foreign MICE business.
Ticketing
e-ticketing has made credit sales easier
the gate
digital channels such as live streaming, pod casting for

broadcasting
With high speed internet, demand for live content is
set to grow
Promotions
Promotions on digital platforms such as social
websites, email, social networks and apps have

increased momentum
Content is more important than frequency
Engagement
Tweets, Blogs, Vlogs and social media commentary
has proved to be effective tool for customer

engagement
Some events have dedicated video handles in video
hosting websites
Streamlined tax burdens

Entertainment tax rates vary across different states of
the country. It can add complexity for a national player
operating in different states across the country. There
could be a need for streamlining the taxation policies for
this sector.
Focused skill development

Skilled manpower is mostly a scarcity in this country.
There may be a need for setting up university courses
specifically targeted towards developing professionals in
the event management field.
Industry representation to the Government

The marriage of digital and events will be the
union of the century, its offsprings will in their
DNA have the strength of both: ROI, Engagement
and Measurability.
- Roshan Abbas
MD,
Encompass Events
The live events sector could need formal representation

to the Government. Considering the number of people
directly and indirectly employed, a representation may be
essential for the benefit of all businesses associated with
this sector.
The business of experience Why I chose this industry?

Tax or even aspects like TDS is potentially crushing for a lot of
players. Add to that the endless permissions and licences required
for even a small event, and the growth of the industry is really being
stifled.
Brian Tellis
Chairman,
Fountainhead and President, EEMA
I chose to be in the business of experiential marketing, and if I had

to choose a hundred times over, I still wouldnt have it any other
way. Informally, theyd call me a happy camper in the entertainment
business. But, fun, games and vibe aside, theres no mistaking the
seriousness of the business.
Experiential marketing is no more the country cousin of advertising.
It has long attained full-fledged, standalone status a reality
continuously being reinforced as more and more managers,
custodians and drivers of brands appreciate the impact it can have
on their numbers.
The industrys own numbers have been more than encouraging.
Its been growing at 8-10 per cent year on year, with the estimated
growth going forward pegged at 20 per cent for bigger players
and 13-15 per cent for others. Primarily, growth that has been
fueled by a gradual assimilation of the unorganised sector into
the mainstream; as also a shift towards more direct consumer
engagement through IP events.
In a sense, the industrys connect with all segments of entities and
people is getting deeper and wider. The canvas keeps expanding
even if under the broader genres of events, activations, promotions,
MICE, social events and IPs.
Beyond a certain threshold socio-economic status, organisation of
personal occasions like weddings, birthdays and anniversaries are
now being regularly outsourced to single-window service providers
aka events agencies. Likewise, religious and political events. Direct
consumer spend, beyond brand promotion, is on an exponential rise.
Yet, despite the realised and potential promise, challenges continue
to confront the industry. Challenges that are good when analysed
through the prism of opportunity.
The foremost amongst which is accountability. The industry has
long graduated from its sunrise status and into the mainstream.
The time has come to develop a mechanism by which to monitor
effectiveness and thereby justify greater spend. Something Id
call a RoI matrix.
The lack of infrastructure is another key concern. Its no good just
having venues like, say, hotels that double up as event facilities.
We need dedicated and specialised infrastructure that will go a
long way in enhancing the event experience.
Bureaucratic and legislative issues represent another formidable
challenge. The burden of taxes be they Service Tax, Entertainment
The authorities need to make things easier and less oppressive,

because, as with the growth of any sector, everybody ultimately
stands to gain from a friendlier regime industry, consumer and
even the exchequer. The need of the hour is clearly a rationalised
tax structure, and honest, single window licencing.
However, the industry itself cannot outsource the solution to all
its problems. It needs to strengthen its own bonds with clients,
consumers and suppliers. The agency must become the glue
between brands, supply chains and end consumers.
On a brand level, agencies need to move from a service provider
mindset to that of partners for which a deep understanding
of the brand, and its needs, is crucial. We have to also become
infinitely more accountable a case for tangible RoI effectiveness,
as mentioned earlier! On the flip side, clients should espouse fair
commercial practices. The regime of multi-agency pitching should
be supplanted by the AoR relationship.
In the supply chain equation, there should be a more scientific
approach to things. We need to remain abreast of relevant
technological advances to not only enhance the experience, but
also rationalise costs, for the client.
As for our relationship with consumers, engaging and monetising
the end-user holds the key to growth. We need to conceptualise
and bring to fruition events with the potential to excite broader,
as well as niche, audiences. Creating IPs in both, the B2B and B2C
space is important.
I am of the firm belief that we live in an entertainment economy. As
consumers, no matter who we are, where we live or what we do,
we expect to be pampered and entertained. Thankfully there has
been a corresponding even if gradual shift in perception that
entertainment comes at a price. Every consumer must appreciate
that entertainment is as much a product as any consumable or
service like say eating out. There are costs involved. In moving
away from the era of freebies and complimentaries, the quality of
entertainment will only improve.
There exist exponential prospects for growth in the experiential
space. But to truly unlock value and potential, the entire system and
processes will need to be strengthened, even as mindsets will have
to evolve. The good news is that we stand at an inflection point.
This is the start of bigger things far bigger than we could have
ever visualised a decade ago. As always, the lithe and nimble will
profit from it.
provided by Brian Tellis. The views and opinions expressed herein are those of the authors and
232
233
The big fat Indian weddings

Need of the hour Recognition to goodwill - Increasing professionalism
Neelabh Kapoor
Creative Director,
Studio Neelabh
within the event industry via Govt recognised event

management professional institutions. Till date 90 per cent of
the same is mostly dominated and managed by decorators who
are non-recognised and inexperienced in their dealings.
System - Streamlining the process and system of planning
and executing a wedding or social event
Statistics say, 30,000 couples get married in India every day during
a peak season. And the recession free Indian wedding industry is
estimated to be a staggering US$ 25.5 billion. To add to this, the
growth rate of the industry is 20 to 25 per cent a year.
The average budget for an Indian wedding ceremony in the middle
class is estimated to be around Rs.20 - 5 million. The upper-middle
and affluent classes are estimated to spend more than Rs.100
million. For the A listers there are no set parameters for budget.
This obviously doesnt include gifts and valuables given as part of
the Indian traditional ceremonies.
With each passing decade the Indian weddings are getting more
lavish. Three decades ago people hardly thought about the lavish
wedding function that has now become a trend. Destination
weddings have emerged and instead of the usual wedding, a whole
itinerary takes formation. The same varies between 1lac to 10 lac
per person while planning for a 500-plus person event abroad. The
present-day Sangeet has also morphed into full-blown, Bollywood
and International performances.
Rising urbanisation has spawned a new class of consumers
with more money to spend, and a passion for fashion. In Indias
high growth retail clothing market, spend on special occasion or
wedding-wear tops the charts.
The Big Fat Indian Weddings are, literally, going places - from
destination weddings on remote islands in Thailand to royal
palaces in France, the options available are infinite. In fact, tourism
departments from around the world are offering great incentives to
promote more and more destination weddings.
A person in India spends one fifth of the wealth accumulated in
a lifetime on a wedding ceremony. That means, a tremendous
opportunity for retailers and service providers to capitalise on.
Certification - Implementation of vendor validity certification
should be prioritised in order to rule the bad fish out!
Government support - Government recognition to the
wedding industry and the professional players. Creating special

platform for the Design and Event industry to take on the world
competition and to excel in design, logistics, entertainment and
infrastructure etc.
Infrastructure improvement - Government to
facilitate investment opportunities to create large network of

infrastructure support which will also increase tourism inflow
into different parts of the country. Encourage more Destination
Weddings and Social events, benefiting and facilitating the
hospitality industry through tax relaxations to attract more and
more people to plan their events in India.
Credit facility - Easy loan facilities and investment policies
to enhance the current entertainment-rich industry to empower

more strategic growth. Empower a set trust worthy government
authority to enable recognised individuals in the given industry
to improve the social event lifestyle.
NGO collaborations - Creating an opportunity for the
underprivileged and recognising their talent and skill sets. Event

management association to collaborate and set up a nonprofit
platform to benefit the economically challenged on day to day
events.
Disclaimer: Unless otherwise noted, all information included in this column/ article was provided
by Neelabh Kapoor. The views and opinions expressed herein are those of the authors and do not
234
12
Deal volume and value in 2013
Searching for opportunities
The overall mergers and acquisitions (M&A) and private

equity (PE) funding activity in India declined in 2013 from
approximately 1,000 deals, with a value of USD49 billion,
in 2012 to 950 deals with a value of approximately USD39
billion1.
Trend of investments in M&E (Volume and Value)
Deal activity in the media and entertainment industry

followed a similar trend in 2013, recording 26 transactions
versus 35 transactions in 20122. Deal values were
comparatively lower in 2013 as the nine reported deal
values totaled approximately USD224 million versus
USD1.5 billion in 2012.
The overall investment in the Indian media and
entertainment sector grew consistently between 2010
and 2012 on the back of key industry themes such as
market consolidation, digitisation, portfolio diversification
and the strengthening presence in regional markets and
digital media3. The total deal value grew from USD693
million in 2010 to USD1.5 billion in 2012. However, amid
the economic uncertainty in 2013, strategic and financial
investors have adopted a more cautious approach
resulting in a slowdown in transaction volume and value.
Despite the slowdown, 2013 did experience a number
of notable transactions; particularly in the television
and digital media space. Marquee transactions in 2013
include:
Source: Mergermarket, Bloomberg accessed on 7 Jan 2014.
Breakdown of Deals in M&E in 2013 (By Volume/

Sector)
Dentsu Medias acquisition of 80 per cent stake in
Webchutney2;
Network 18 Medias approximately USD14 million
investment in HomeShop182;
Publicis Groupes acquisition of advertising and digital
media companies Beehive Communications, iStrat

Software and Market Gate2;
Zee Medias acquisition of Maurya TV2.
Some private equity funds have made investments in the

TV distribution sector, with the most notable being:
Goldman Sachs investment of USD110 million in DEN
2
Networks ;
Tata Capitals investment of USD40 million in Tata Sky2;

Morpheus Capitals acquisition of 8 per cent equity
stake in TVC Skyshop for USD6.25 million2;
Providence Equity Partners acquisition of 50 per cent
stake in Star CJ Network2.

Note: 2013 recorded 26 deals totaling approximately USD 224 million
The digital media space has shown most activity within

the industry contributing 42 per cent of the deal volume
within the M&E industry. Deal activity within the digital
media space has primarily been driven by investment
from foreign players for entry and expansion within the
digital advertising sector2.
Going forward, the key themes driving transactions
in the media and entertainment sector will likely be
consolidation within the industry, particularly with national
players entering regional markets and capital raisings
through private equity or IPOs, for expansion plans.
Television
Television, one of the largest segments of the Indian
media and entertainment industry, continues to
constitute a significant portion of the overall deal value,
with high levels of interest from private equity players.
01. Grant Thornton Deal Tracker, 2012 and 2013
02. Mergermarket, Bloomberg accessed on 07 Jan 2014
236
237
Liberalisation of the media and broadcasting sector;

raising the foreign investment cap to 74 per cent4, has
given rise to a number of deals within the space by
allowing distributors and broadcasters to raise funds
from foreign private equity firms. DEN Networks, one of
Indias leading cable TV distribution companies reaching
an estimated 11 million households5 across India received
an equity infusion of USD 110 million from Goldman
Sachs6. The funds are to be used for the expansion and
digitisation of DENs existing network7. Tata Capital
invested USD40 million in Tata Sky. Providence Partners
acquired a 50 per cent stake in Star CJ Network India
from Star Group for an undisclosed amount6. Another
television shopping channel TVC SkyShop raised
approximately USD6 million from Morpheus Capital6.
Consolidation has continued to drive deal activity within
the space especially within regional markets. Zee Media
has announced the acquisition of Maurya TV, a regional
infotainment channel catering to the Bihar-Jharkhand
belt6.
Going forward, the shift towards digitisation and the
relaxation of FDI norms in the sector will most likely
continue to drive deals in this industry. As per the
Government of Indias original plans, all phases of
digitisation were to be implemented by December 2014.
However, the process of digitisation across all phases
i.e. from seeding of boxes, setting up of subscriber
management systems, packaging of channels and
increase in Average Revenue per Users (ARPU), will
not happen by December 2014. Significant increases in
ARPU are likely to be seen by 2015 onwards9 as there is
a delay expected in the process. The increase in the FDI
cap, however may provide the much needed impetus and
accelerate the transition from analogue to digital TV. The
additional capital could allow television distributors to
upgrade and expand their cable broadband networks to
capture larger audiences.
To capitalise on digitisation, broadcasters are expected
to enhance their content portfolios. This may further
drive consolidation and regional expansion where major
broadcasters might shift their focus towards regional
growth by launching/acquiring new channels and
developing localised content in order to capture larger
audiences.
Print
India is one of the few markets where print continues to
be a dominant medium garnering nearly 45 per cent of the
total advertising spend9. Due to the growing literacy rate,
diverse vernacular market, low internet penetration, and
multiple mediums in which it is available, print media is
expected to remain pervasive in India.
In keeping with the overall trends in the media industry
however, the print media industry is also witnessing
the development of new digital media forms. While
newspapers continue to thrive, magazines seem to
have faced a difficult year. In general, the circulation of
weeklies and monthlies is on the decline prompting a
04.
05.
06.
07.
Foreign Direct Investments (FDI) in Broadcasting Sector in India, TRAI, August 2013
Den Networks Press Release, Q1 FY2013-14
Mergermarket, Bloomberg accessed 7 Jan 2014
I&B Ministry okays Goldman Sachs $110-million investment in DEN Networks, Economic Times,
September 2013
number of divestments in the space. ABP Group sold its

Businessworld magazine to a group of private investors
for an undisclosed amount6. After consecutive losses,
Business Standard announced the sale of its magazine BS
Motoring to Delhi Press8.
With a limited number of pan-India players in the market,
consolidation and regional expansion are also likely to
emerge as a theme in the coming year. 2013 witnessed
limited deal activity within the space as smaller players
refused to exit. To combat the same, existing large
media groups are looking to consolidate multiple media
platforms to gain economies of scale, thereby putting
pressure on the smaller players. The likelihood of
mismatch in pricing expectations could potentially curb
deal activity9.
Radio
Presently, All India Radio has a network comprising 237
stations which provide coverage to 99.14 per cent of the
population and there are 242 private FM radio stations
that are in operation in 86 cities of the country. Phase III
of the FM radio services expansion plan is intended to
extend FM radios reach to 294 cities with additional 839
FM radio stations thereby boosting the regional growth of
FM radio stations. The FM Radio coverage is about 40 per
cent of the territory of India and is expected to reach 85
per cent after implementation of Phase III of the FM Radio
service expansion plan10.
This growth is expected to be stimulated through new
mediums like mobile phones and the internet. The fact
that a large proportion of radio listenership is on portable
devices and occurs out-of-home, bodes well for the
industry growth as it can widen operators reach and
increase their potential to attract national advertisers.
As a part of planned Phase III FM Radio expansion, the
government has relaxed the restrictions on ownership
of multiple licenses and frequencies in a city10. These
along with the allowance of cross media ownership
and possible permission to air news and current affairs
hold the key to the growth of this segment. While the
regulatory environment continues to be favorable, there
is ambiguity around the completion date for Phase III
expansion, and therefore investment in the sector is likely
to be slow and tempered.
Advertising agencies and

digital media
Deal activity in the advertising space has been dominated
by digital media companies with significant interest
from international players. Leading industry players like
Publicis and Dentsu have made a number of acquisitions
within the advertising and digital media space in India6,
in an effort to develop their digital and mobile technology
platforms and strengthen their presence in the country.
08. Delhi Presss bold gamble, Business Standard, 04 January 2014

10. Consultation Paper on Issues relating to Media Ownership, TRAI, February 2013
Dentsu acquired 80 per cent stake in Webchutney, a
digital marketing company11;
Publicis made four acquisitions in the year: iStrat
Software - a Digital Media Agency in Delhi offering

online Marketing services, Convonix systems a digital
marketing consulting firm, Beehive Communications
- a Mumbai-based advertising agency and MarketGate a brand and business consulting firm11;
Peepul Capitals investment of USD30 million in Komli

11
Media .
Conventional media such as television and newspapers

continue to be the largest contributors to advertising
revenue, however the internet has gradually been
increasing its share in the pie. Spend on digital advertising
is expected to grow by approximately 37 per cent in
201412.
The advertising space could continue to see high levels
of deal activity in the coming year driven by international
strategic players looking to expand their portfolio in India
and acquire talent in an attempt to begin to address the
digital advertising opportunity.
Outlook
Companies in the Indian media and entertainment
industry are currently poised for substantial growth in
the coming years. Regulatory interventions have been
a key enabler of growth for the sector. Continued cable
digitisation, Phase III licensing for radio and 4G rollout,
could spur growth in the medium long term.
Digitisation is expected to improve broadcast economics
significantly. To profit from the digitisation of television
and films, TV distributors and broadcasters are keen to
raise funds for expansion and enhancement of current
portfolios. However, the delays in implementation of the
DAS schedule are likely to dampen deal activity12.
Regional markets remain key centers of growth. With
regional print and television still being a dominant sector
within the industry, media companies are expected
to focus on enhancing their regional presence. While
large media companies are looking to acquire regional
newspapers and television channels, disparity in price
expectations could continue to be an impediment to deal
activity.
The rapid increase in mobile and wireless connections
mostly continues to drive the growth of internet
penetration in India. As digital media is still in its nascent
stages in India, the industry is likely to witness significant
investment within this space in the future.
Key transactions in 2013

Date
Target Name
Target Sector
Acquirer Name
March
Convonix Systems
Digital
Publicis Groupe
April
End To End Marketing Solutions
Advertising
McCann Worldgroup India
May
Webchutney Studio
Digital
Dentsu Media & Holdings India
September
Business World Magazine (ABP Group)
Print
Private Investors
October
Maurya TV
TV Broadcast
Zee Media Corporation
October
HomeShop18
TV Broadcast
GS Home Shopping, Network 18 Media
October
Beehive Communications
Advertising
Publicis Groupe
December
iStrat Software, MarketGate
Digital
Publicis Groupe
March
Star CJ Network India
TV Broadcast
Providence Equity Partners
May
DEN Networks
TV Distribution
Goldman Sachs Capital Partners
August
TVC Skyshop
TV Broadcast
Morpheus Capital Advisors
September
Tata Sky
TV Distribution
Tata Capital
October
Komli Media India
Digital
Peepul Capital
M&A
PE

11. Mergermarket, Bloomberg accessed on 7 Jan 2014
12. KPMG in India Analysis
238
13
Outward bound
Next frontier for Indian M&E sector players
Outward bound - Next frontier

for Indian M&E sector players
Global M&E market
After the economic dip in 2008-09, the Media and

Entertainment (M&E) markets have been witnessing
growth as spending by consumers is on the rise again.
The global M&E market has witnessed signs of steady
growth over the past three to five years with some
markets such as Latin America, Middle East and Africa
(MEA) growing faster than the others.1
Projections
Due to recession, the global M&E market grew at a CAGR
of less than 5 per cent from 2008 to 2013. However, the
outlook for M&E market looks positive with projected
CAGR of 6 to 7 per cent (2014 2018) outpacing the
existing CAGR.2
Several multinational M&E players such as Disney, 21st

Century Fox and Viacom have expanded their operations
across regions. China too, has begun its overseas foray
with Wanda buying AMC Theatres in the US in 2012.
Indian players such as Zee and Multi-Screen Media
(Sony Entertainment Television) have also established a
strong presence across the globe, but with their content
primarily catering to South Asian consumers. Numerous
Indian films also have been filmed across regions and
have been screened in film festivals such as Cannes,
Toronto, Busan, Dubai etc.
Comparing MEA with mature markets

From 2008 to 2012, the MEA region grew at a CAGR of
around 15 per cent (highest among all regions); while
mature markets such as North America and European
markets grew marginally at a CAGR of around 1 per cent
and 2 per cent respectively. For future periods as well,
MEA is poised to record amongst the highest CAGR at 12
to 14 per cent among all regions.2
Global advertising market
This chapter focusses on the Middle East and Africa

(MEA) region, the fastest growing M&E market globally.
From the current share of 2.5 per cent in global M&E
market, MEA region is expected to grow its share to ~4
per cent by 20182. A large South Asian diaspora market
that could provide a base, many common features in
terms of culture, high economic growth, good quality
infrastructure, and favourable policy roll outs are some
of the drivers which could benefit Indian M&E players
business in this region. Indian companies can also find
opportunities in providing technology, scale and leading
industry practices in production and post production to
local companies which are small and not very organised.
They can also play a role in talent and skill development in
the region.
In terms of spending on advertisements, the global

market size is expected to reach around USD642 billion
in 2018 at a CAGR of just over 4 per cent. Though MEAs
contribution to the global media advertising market
is currently low compared to other regions, MEAs
contribution is expected to grow at a fast clip of around 7
per cent to reach around USD26 billion by 2018.3
Total media advertising spending worldwide (in USD billion)

Projections
250
219
200
171
150
185
142
130
134130
198
192
178
133
153
149
145
141
188
179
170
161
152
137
143
212
206
100
50
37
34
31
21
19
18
16
49
45
41
23
22
57
53
26
24
0
2012
2011
North America
2013
Asia Pacific
2014E
Europe
2015E
2016E
Latin America
2017E
2018E
Middle East and Africa
Source: Data gathered by eMarketer, 25 September 2013, KPMG in India analysis
01. Source: Global Media Report 2013 by McKinsey and Company, Inputs from Wilkofsky Gruen Associates
02. Source: KPMG in India analysis
03. Source: Data gathered by eMarketer, 25 September 2013 and KPMG in India analysis (Reference: http://www.emarketer.com/Article/Worldwide-Ad-Growth-Buoyed-by-Digital-Mobile-Adoption/1010244
240
241
For the MEA market, the highest year-on-year growth

comes from digital advertising. Digital advertising is
expected to rise at a CAGR of over 31 per cent from 2013
to 2018 and cross USD5 billion by 2018.4 Growth of digital
advertising is in sync with rapid penetration of broadband
and smart phones. The number of smart phone users
in the region has grown at an astonishing staggering
CAGR of 113 per cent in last 4 years. Due to this, mobile
advertising and social media are expected to emerge as
the strongest mediums for advertising in the region.
Digital advertising spending in Middle East and

Africa (USD billion)
Key figures on MEA media usage and spending

2009
2013
CAGR
6.0
5.2
Internet Users
123 million
260 million
21%
358.3 million
525.8 million
8%
5.4 Million
112 million
113%
61.9 million
209.8 million
36%
5.0
Mobile Phone Users
3.8
4.0
3.1
3.0
Smartphone Users
2.4
1.9
2.0
1.4
Social Network
Users
0.9
1.0
0.1
0.0
Source: Data gathered by eMarketer, 1 Oct 2013 and KPMG in India analysis(Reference: http://www.
emarketer.com/Article/Smartphone-Usage-Nearly-Double-Middle-East-Africa/1010249 )
2011
2012
2013
2014
2015
2016
2017
2018
Source: Data gathered by eMarketer, 28 August 2013, KPMG in India analysis(Reference: http://www.
emarketer.com/Article/Mobile-Expands-Its-Share-of-Worldwide-Digital-Ad-Spend/1010170)
Mobile phone users in MEA in 2009
Mobile phone users in MEA in 2013
5,1%
112,21%
413.8, 79%
353.3,99%
Feature Phone Users (million)
Smart Phone Users (million)
Source: Data gathered by eMarketer, 1 Oct 2013 and KPMG in India analysis (reference: http://www.
emarketer.com/Article/Smartphone-Usage-Nearly-Double-Middle-East-Africa/1010249
04. Source: Data gathered by eMarketer, 25 September 2013 and KPMG in India analysis
(Reference: http://www.emarketer.com/Article/Worldwide-Ad-Growth-Buoyed-by-Digital-MobileAdoption/1010244)
Feature Phone Users (million)
Smart Phone Users (million)
Source: Data gathered by eMarketer, 1 Oct 2013 and KPMG in India analysis (reference: http://www.
emarketer.com/Article/Smartphone-Usage-Nearly-Double-Middle-East-Africa/1010249
M&E market in Middle East

and North Africa (MENA)
Overview
Riding on the growing phenomenon of digital and social
media, coupled with rapid ICT infrastructure growth, the
M&E industry in MENA is being forecasted to grow at a
rate of around 16 per cent by 2018.5
With Expo2020 coming to Dubai, the first city in MEA
region to host the expo, UAE is set to invest more than
USD8.4 billion in building the exhibition infrastructure and
on ancillary services. This is expected to include around
USD6.8 billion for capital expenditure and around USD1.6
billion for operational expenditure including branding and
advertising. This six month long event is estimated to
attract more than 25 million visitors in the country.6
Another first for the region will be the FIFA World Cup
football which will be held in Qatar in 2022. The World
Cup is one of the most sought after opportunities for
advertisers to showcase their brands in front of millions
of viewers. Typically, around 75 per cent of the budget of
such events is derived from sponsorships and corporate
partnerships. Qatar is expected to spend ~USD200
billion for the World Cup, of which around USD40 billion is
expected to be spent on promotional activities including
media campaigning and branding over next eight years.7
After the economic slowdown in 2009 and recent
uprisings in countries such as Egypt, Libya, Syria,
Lebanon, expenditure patterns of consumers in MENA
region have revealed that UAE and Saudi Arabia are the
focus countries in terms of the advertisement market
due to high spending coupled with a young population
and government support. Qatar is also expected to
spend a substantial amount to promote itself as a
tourist destination ahead of the World Cup. Even though
consumer expenditure of Iran, Israel and Egypt has been
on the higher side till 2011, given the current political
uncertainty, it may take a few years for M&E markets to
stabilise in these countries.
Consumer expenditure in MENA (USD billion)

250
Iran
200
Egypt
UAE
Saudi Arabia
Israel
150
In terms of different platforms for advertising, TV was

the most preferred medium with a share in excess of
40 per cent. Though the share of print media (including
newspapers, business magazines, and consumer
magazines) in the global advertisement market has
declined heavily over the past few years, it has declined
marginally and retained a healthy share in the MENA
region of around 35 per cent. Radio is a relatively small
segment with a share of around 5 per cent5.OOH and
internet advertising are the upcoming segments for
advertising and accounted for around 10 per cent each in
the overall advertising market. Online advertising industry
in MENA is expected to grow at a CAGR of 28 per cent
and is expected to cross USD1 billion mark by 2017.8
The decline of print media in MENA is not as radical
as compared to more mature markets and is likely to
be brought about by the movement of Generalised
to Personalised Media. In this movement, traditional
media platforms are slowly losing market share to new
media due to its capability to receive highly personalised,
high quality content either at home or on wireless
devices. Revamped ICT infrastructure such as high-speed
broadband through fibre optics, internet access over
3G/4G/Long Term Evolution (LTE) networks have propelled
the growth of Personalised Media.
The GDP of the Middle East and North Africa

(MENA) region is driven largely by the six GCC
countries which are characterised by a low
population base but a very high spending power.
Significant potential exists in other volume
driven markets like Egypt as well, where a
largely young and technology savvy population
is driving growth.
With increasing investments in 4G/LTE network
by operators as well as in passive infrastructure
by the governments across the region, future
M&E demand is expected to be driven by mobile
broadband, as more and more services become
accessible through smartphones and tablets.
At the same time, content production remains
largely fragmented. There are no worthwhile
players with the required infrastructure, skills or
the scale to be able to cater to the huge demand
for high bandwidth consuming content that can
be created in the process. This could present
an exciting opportunity for Indian content
production houses, who could partner with local
players to expand the market.
- Anindya Roychowdhury
KPMG Partner in the Middle East
100
Other
MENA
countries
50
0
2006
2007
2008
2009
2010
2011
Source: 6th Edition of Consumer Middle East and North Africa report by Euromonitor International,
2013

06. http://www.zawya.com/story/Expo_2020_a_boost_for_Dubais_economy-ZAWYA20131002074146/
2 October 2013 and KPMG in India analysis
07. http://www.sportsgrid.com/soccer/qatar-will-spend-200-billion-on-2022-fifa-world-cup-what-elsecould-you-buy-with-that-much-money/#6, 9 July 2013

08. http://english.alarabiya.net/en/media/advertising-and-pr/2013/07/11/Arab-web-advertising-marketset-to-hit-1bn-by-2017.html, 26 September 2013
242
243
Television
Historically, Egypt has been the leading country in MENA
for TV content production with over 65 per cent market
share in 2012. GCC countries have the next share of
around 20 per cent with UAE in the lead. Other countries
such as Syria, Lebanon, Iraq and Jordan contribute the
remaining 15 per cent share of the TV production market
in MENA.9
TV viewing habits in the region have remained fairly
constant in spite of the emergence of online and social
media in last 35 years. Average TV viewing time in key
markets such as Saudi Arabia and Egypt has ranged
between 3 to 3.2 hours9. However, this trend is likely to
change in the near future.
The TV industry in the region is expected to reach USD3
billion by end of 2014.9 The industry is dominated by Freeto-Air (FTA) platform. Though pay TV has been introduced
in the market, it has not grown exponentially. There were
around 538 FTA channels in 201110. The broadcasting
industry remains concentrated across three major
markets Egypt (18 per cent), Saudi Arabia (17 per cent)
and UAE (14 per cent).9
Pay TV witnessed growth from 2006 to 2011 in the region;
however, it has slowed down after 2011. There is a great
demand for sports related channels, especially football, in
the region and various pay TV providers such as Al Jazeera
come up with special packages for covering events such
as World Cup football, Euro championship etc.9
Advertising is the major revenue stream for players
constituting ~ 70 to 75 per cent of overall TV revenues.
There are a large number of FTA channels which are
running on ad supported models. Pay channels are
limited and are mostly restricted to foreign channels. TV
advertising is projected to grow at a CAGR of around 5
per cent from 2014 to 2018 while pay TV revenues are
projected to grow at a higher range between 15 to 18 per
cent from 2014 to 2018,11 albeit on a smaller base.
Print
The print industry in the MENA region has demonstrated
a stronger resilience in the last few years as compared to
more mature markets such as North America and Europe.
However, following the trend globally, print medias share
in overall M&E market has shown a decline in the last
few years. Overall print industry revenues are estimated
to cross USD3 billion by end of 2014. Revenues from
subscription range from 30 to 35 per cent across different
countries in MENA.9 Revenues from subscription as
well as advertising are likely reducing due to a rise of
substitutes offered by digital media.
The region experienced a slight decline of 2 to 3 per cent
in newspaper print circulation; the biggest market for print
circulation i.e. Egypt, saw the launch of new newspapers
such as Al Tahrir, Al Horia Wa Al Adala and Al Mesryoon
following the exit of President Hosni Mubarak in February
2011.9

10. http://www.arabadvisors.com/Pressers/presser-210611.htm, 21 June 2011
With differentiated editorial content and targeting the

underserved categories of customers, several newly
launched newspapers have been successful. For
example, success of sports-only newspaper Sports3600
suggests that there is demand for high quality regional
content for a niche/underserved segment of consumers.9
Some newspapers shut down in the last few years due to
their inability to re-invent themselves in the wake of the
digital revolution. Some of them include Awan, Arrouiah
and Assawt from Kuwait; Al Waqt and Al Meethaq from
Bahrain9. Due to lack of auditing and a credible third party
measurement system, a majority of the advertisers in the
region have to rely only on claimed circulation numbers
by publishers for making their investment decisions.
With the rise of online consumers in the region, many
advertisers are tuning to online media for branding and
advertising initiatives.
The magazine industry in the MENA region went through
a rough patch in 2008-09 and forced some of the players
to close. However, more than 60 new magazines
were launched in 2011 alone. Though there are several
segments in which magazines are available such as
lifestyle, business, fashion, shopping, and children and
youth, the dominant segment is womens magazines.
It represents around 75 per cent of the total circulation
of magazines in the region. This segment shows a high
degree of consolidation with the top 5 titles accounting
for around 80 per cent of circulation.9
Several newspaper and magazine publishers have
started creating and distributing content online to cater
to wider categories of consumers. For example a
leading newspaper in UAE, Emirates Business 24/7,
ceased publishing in 2010 and started publishing its
content online in the same year. Also, Al Mofakkerah
Al-Eqtisadiah, a subscription-based business newspaper
published twice a month from Jordan stopped printing
in 2010 and is now published online from Qatar as a
business news portal9. As online content becomes well
entrenched, there can be possibilities for global players to
participate in content syndication.
Films
Although momentum has been generated in recent
years, the volume of Arabic film content is still very small
compared to international volumes. Between 2005 and
2010, the Middle East contributed less than 1 per cent,
or 215 films out of around 30,000 films produced in
the world during this period. Though very few films are
locally produced in MENA, there is a huge market for film
distribution for foreign language films. Further, production
of Arabic film and TV programmes is significantly below
par compared to other mature markets representing only
around 0.05 per cent of GDP. 9
Egypt, UAE, Jordan, Morocco and Lebanon have been the
leaders in Film and TV content production due to a large
community of artists and technicians. Additionally, these
countries have extended benefits to content producers
for production and post-production of film and TV content.
11. Article Changing market: Print publications remain dominant, but new outfits are on their flanks by
Oxford Business Group, KPMG in India analysis
Till 2012, Egypt produced more than 30 per cent of all

feature films produced in MENA region. Other notable
countries were Lebanon, Jordan and Syria which had
a share between 10 to 20 per cent in MENAs film
production market. GCC countries had around 33 per
cent share of the market with UAE in the lead. However,
the recent uprisings in the region have impacted the
industry.12
Jordan and Lebanon Leading
One of the
leading
filming
destinations
for Hollywood
films
Production of
Arabic music
destinations for film shoots and TV

content production
Syria
Lebanon
Tunisia
Morocco
Iraq
Jordan
Algeria
Libya
Egypt
Saudi
Arabia
Kuwait
Bahrain
Qatar
UAE
Oman
Regional headquarter of most of global media
Hub of Arabic film and TV
production, in spite of unstable

political environment
houses
Robust growth of infrastructure and facilities
Dubai Media City and Two Four 54 are the
Yemen
media zones setup to promote M&E sector
Morocco, Jordan, UAE have been chosen as filming

locations by many in Hollywood, Bollywood as well
as other film industries due to their varied landscape,
historical places and a geographically convenient central
location. Notable films shot in Jordan include The Hurt
Locker (2008) and Transformers: Revenge of the Fallen
(2009). Troy (2004) and Inception (2010) have been shot
in Morocco while Mission Impossible Ghost Protocol
(2011) and Fast and Furious 7 (2015 release) have large
portions shot in UAE. The UAE Government has been
instrumental in attracting film and TV show makers as
they offer high quality M&E infrastructure, financing and
incentives required to support a vibrant media industry.
Several of the worlds leading television broadcasters,
advertising agencies, and print publications are based in
UAE with most of them setting up in Dubai or Abu Dhabi
as regional headquarters for their operations. Dubai
Media City, which started in 2001 as a specialised media
zone is one of the preferred facilities by local as well as
international media players.12
Various film festivals have also been started to promote

regional films and to promote the region in terms of
locations to attract tourists. UAE premiered its first
feature film City of Life in 2009 while Saudi Arabia
premiered Journey to Mecca in 2012. Notable festivals
include12:
Gulf Film Festival (GFF), Dubai
Dubai International Film Festival (DIFF)
Abu Dhabi Film Festival (ADFF)
Doha Film Institute (DFI).
244
245
New Media
New or Digital Media has revolutionised consumer habits
in the region. Current spending on online advertising
in MENA is around USD300 million which is expected
to touch USD1 billion in 2017. Saudi Arabia is one of
the leading countries in terms of digital branding and
advertising as it accounts for one third of the overall
online advertising expenditure in the MENA region.13
There have been numerous initiatives taken up by

the Governments / private sector players like Group
Buying Services, e-commerce and online market places,
recommendation services, socially focused services etc.
In the mobile space, mobile apps and mobile gaming, and
augmented location based services have been popular.
The vast young population in MENA is keen to use

the latest smart phones and tablets to satisfy their
information and entertainment needs. As per a report
released by UAEs Telecommunications Regulatory
Authority (TRA) during the 3rd quarter of 2013, ~ 46
per cent of the handsets registered on UAE networks
were smart phones. During this quarter, consumers in
UAE visited websites of various applications 1.5 billion
times through their smart phones and through fixed
internet services. Smartphone makers such as Apple,
Samsung, LG, Blackberry, Sony Ericsson, Nokia etc. have
started releasing their latest products in MENA region
simultaneously with their global launch. Smartphone
maker Blackberry launched its Z series smart phone
globally in Dubai last year.14
Online
Several large advertisers have now started using online
advertising as well as social media to promote their
brands. Their campaigns have tasted success and this is
likely to lead to more extensive usage of social media.
Advertising spend as % of GDP (2011)
Arab Region (MENA)
0.23
Central and Eastern Europe
0.54
0.58
Latin America
Key highlights based on KPMG in India

analysis and from a survey recently conducted
by IPSOS
around digital media:
Western Europe
Top product shopped online in MENA: Clothes

Governments as well as private sector players have
acknowledged the strength of digital media and have
started taking necessary steps in upgrading the ICT
infrastructure, policies, and the budgets as well. With
Yahoo taking over local media firm Maktoob in 2009 for
USD164 million and research giant Thomson Reuters
acquiring Zawya in 2012, it reinforces the fact that more
and more emphasis will now be placed on digital media in
the region.15
Digital
Digital has the highest potential for growth in the region
due to favourable demographics16:
Young population (more than 50 per cent of the
population in the region is below the age of 25),
0.64
0.97
North America
Top country for internet usage: UAE

Leading countries for social media usage: Jordan,
UAE, Saudi Arabia
0.61
Asia Pacific
0.2
0.6
0.8
1.2
Digital advertising share as % of total advertising

spend (2011)
2.80%
India
Arab Region (MENA)
4%
16.80%
US
18.00%
South Korea
Australia
21.10%
China
21.40%
23.30%
Netherlands
27.20%
Denmark
32.30%
UK
0%
High literacy rates

High uptake of smart phones, tablets and similar
gadgets given the high spend power in the oil-rich GCC
countries.
13. Trade Arabia News Service, November 2013

14. Article on consumption habits of MENA users in ArabianGazette.com, March 2013
0.4
15. Wall Street Journal, 2009 and 2012

10%
20%
30%
40%
Based on KPMG in India analysis, nearly 85 per cent

of the population spends more than 30 minutes online
every day. Hence, there is a vast consumer community
available which spends a significant amount of time online
every day. This has prompted organisations to come up
with newer business models. There are also variations
in the online activities for different age groups, with
common activities for kids including online games, social
networking and videos and TV programmes.
Saudi Arabia is now the biggest user of YouTube per
capita in the world as per a recent study17. This is
primarily due to the significant percentage of young
population (an overall population of 28.3 million)
which is seeking a reprieve from the regions bland TV
programming as well as monitored usage of social media
platforms like Facebook and Twitter18. This younger
generation is turning to YouTube for more relatable and
entertaining content. There are agencies and shows
such as UTURN and 3al6ayer that cash in on YouTubes
regional popularity. UTURN has managed to get 286
million views on the site so far.
Key statistics Saudi Arabia

Active Twitter users
Number of Tweets per month
Active Facebook users
Daily YouTube views
3 million plus
50 million
6 million plus
90 million plus
Source: http://www.arabiangazette.com/50-million-tweets-winds-social-change-kingdom-saudiarabia-20130408/
It is evident that social media has become an integral

part of the life of people here. The rise and popularity
of social media, especially Twitter, is due to the fact
that there is heavy censorship in many countries in the
region and people are using social media as a tool to
voice their opinions.
Social
Social networking is the second most common activity,
after checking emails carried out online in UAE by
consumers.19 It also played an instrumental role during
the uprisings in MENA region in the last few years. It was
used extensively by people to voice their opinions as
well as by protestors to mobilise people quickly due to its
extensive and fast communication speed.
When you get connectivity to the web, it puts you in a different

class of people. People now online in rural villages in Africa, start
to join social networks in their own country to enable business.
They join social networks with others countries, which is very
important in delivering healthcare and part of its education.
Percentage of population citing social

networking as their most common activity
2009
2012
Egypt
10%
30%
If there is an important message to get out about an epidemic, or

food, or how to deal with crop disease, when you have internet
infrastructure it spreads very quickly. It is an important tool for
delivering healthcare as well as commerce.
7%
25%
While this was important, whistleblowers perform an important

role in monitoring people in positions of authority.
Saudi Arabia
October 2013
Sir Tim Berners-Lee

World Wide Web Inventor
Key statistics UAE

Visits to social networking sites in 3Q 2013
13.7
billion
Source: Abu Dhabi Media Summit, 2013
Share of various social media sites

Facebook
91%
Twitter
8%
Maktoob, LinkedIn, Myspace
1%
Source: http://www.itp.net/mobile/596057-smartphones-account-for-46-of-uae-registered-handsetstra
17. http://www.fastcompany.com/3021832/fast-feed/the-worlds-most-avid-youtube-viewers-are-insaudi-arabia?partner=rss, 18 Novembe 2013
18. http://www.theguardian.com/world/2013/dec/17/saudi-arabia-digital-twitter-social-media-islam, 17
December 2013
19. UAE yearbook 2013
246
247
Radio
The radio industry in the region is growing mostly due
to liberalisation of the sector in many countries. This has
likely enabled numerous private sector radio stations
to start operations. As of December 2011, UAE had the
maximum number (38) radio stations in the region.20
Some of the notable radio channels in UAE include:20
Rock Radio, Coast 103.2 (English content);
Al Arabiya, Al Khaleeja (Arabic content);
Gold FM, Radio ME FM (Malayalam content),
Radio Mirchi, City 101.6 FM (Hindi content);
Hello FM 89.5 (Tamil content);
Tag 91.1 (Filipino content)
Out-of-Home (OOH)
Out-of-home (OOH) advertising is a steady component in
overall advertising market in the region with around 10 per
cent share. Outdoor advertising (billboards), digital indoor
advertising, and cinema advertising are key components
of the OOH sector. There is a large amount of variation
in OOH advertising across MENA countries with OOH
accounting for around 30 per cent of revenues in Lebanon
while in Qatar it merely stands in the range of six to eight
per cent20. This is primarily due to the controls put in by
Governments over outdoor advertising. New entrants
such as Al Barq Digital, based in Abu Dhabi (UAE), have
started outdoor advertising in digital format and are
currently providing their services in various malls, kiosks
in UAE and in other countries in the region.
M&E market in Sub-Saharan

Africa (SSA)
Africa is a very diverse market with a population of around
1.1 billion spread over 55 recognised countries/states.21
Nigeria is the most populous country in Sub-Saharan
Africa (SSA) with a population of over 150 million while
Seychelles is the smallest, with only around 100,000
people. Over 1,500 languages are used in Africa.22
Africas population is about to touch 2 billion by 2050
and the rate of urbanisation in Africa is also on the rise
with almost 60 per cent of the population expected to
be living in the cities by 2050. The economically active
population (i.e. population between15 to 65 years of age)
is estimated to grow from 56 per cent to 66 per cent
a striking contrast to more mature continents whose
populations are aging and moving into the dependent
category.22 This makes it a promising market for the
Media and Entertainment sector in the future.
Based on KPMG in Indias analysis, SSA is poised to
grow at a rate of five to six per cent compared to the
growth of global economy at a rate of 2 to 3 per cent
between 2011 and 2020. Consumer expenditure in SSA
was around USD600 billion in 2010 and is expected to
reach nearly USD1 trillion by 2020 highlighting the scope
of opportunities. South Africa and Nigeria together
account for more than 50 per cent of overall consumer
expenditure in SSA and hence are the key countries for
Media and Entertainment sector as well.22
Consumer expenditure in SSA (USD billion)
1000
800
600
625
2011
2012
660
690
715
750
790
820
865
2017E
2018E
2019E
910
600
400
200
0
2013
2014E
2015E
2016E
Source: Report by Accenture on African Consumer Markets, 2011, KPMG in India analysis

21. http://www.prb.org/Publications/Datasheets/2013/2013-world-population-data-sheet data-sheet.
aspx , 2013
22. Report by Accenture on African Consumer Markets, 2011
2020E
According to Nielsen survey for media in Africa (2013),

one of the key insights in terms of peoples media
preferences states that though advertising in print and
electronic/digital media is important to create awareness,
Word of Mouth endorsements stand out as one of the
most influential drivers for purchases.23
Based on this survey and KPMG in India analysis, selec
countries of SSA were grouped based on the factors
such as a) Media penetration, b) Frequency of usage, c)
Range of programming / mobile services and d) Digital /
social media activities.23
Savvy
Selective
Simple
South Africa
Nigeria
Ghana
Kenya
Zambia
Cameroon
Botswana
Zimbabwe
DRC (Congo)
Namibia
Tanzania
Ethiopia
Angola
Uganda
Madagascar
The survey suggested that TV, radio and mobiles have

the highest usage while usage of print media varies
dramatically across the countries.
In summary, people in savvy countries are more likely
to read print media, access internet, interact using social
media and use smart phones. Population in selective
countries is the largest and most diverse range of
consumers at various media intersection points. These
countries typically have higher costs for mobile data and
voice thereby limiting the development of digital media.
Simple consumer countries have the lowest GDP per
capita and lowest media involvement which is evidenced
by the fewer independent TV and radio stations, media
regulations as well as high costs for mobile internet
usage.23
According to KPMG in India analysis, nine countries
in SSA are likely to account for ~75 per cent of total
consumer spending in SSA by 2020. We divided these 9
countries in geographical sub-regions i.e. east, west and
south and picked the top country from each sub-region for
further analysis - Kenya, Nigeria and South Africa. We shall
now discuss the different media platforms in the region,
focussing more on these three countries
Mozambique
Penetration range across SSA (Percentage)

100
92
97
91 92
95
87
91
88 90
89
81
80
81
69
60
55
50
47
42
40
33
28
29
22
20
27
25
23
0
TV
Radio
Total
Source: Nielsen Survey for Media in Africa, 2013 and KPMG in India analysis
23. Nielsen Survey for Media in Africa, 2013 and KPMG in India analysis
Mobile
Savvy
Newspaper
Selective
Magazines
Simple
Internet
248
249
Sub-region
Population
Country in 2009
(USD billion)
Estimated
Spend in
2020
in Nigeria is expected to grow from 2.5 million to

approximately 3.2 million in next five years.24
Kenya
40
23
40
Ethiopia
83
20
40
For most advertisers in Nigeria, TV has been one of the

most preferred options for the past few years. Advertising
market is primarily focussed around urban areas in Nigeria
with more than 60 per cent of total advertising budget
spent in and around Lagos.24
Uganda
33
15
30
Kenya
Nigeria
151
115
165
Ghana
24
15
30
Senegal
13
10
15
South
Africa
49
215
315
Angola
19
14
20
Zambia
13
10
25
(million)
East
Spending
in 2010
West
South
(USD billion)
Television
South Africa
South Africa is the most important market for TV industry
in SSA and is expected to grow at a CAGR ranging from
six to eight per cent in the next five years. Revenues
from pay TV subscriptions account more than 55 per
cent of the overall TV industry revenues compared to 45
per cent contribution of TV advertising. Share of pay TV
subscription revenues is on the rise and is expected to go
over 60 per cent by 2018.24
According to KPMG in India analysis, South Africa is
the largest pay-tv market in Africa with approximately 5
million subscribers. Pay TV has gained momentum in the
country in the last few years and is expected to add 2
million more subscribers in next five years.24
TV advertising market in South Africa is fairly stable
and is expected to grow at a CAGR ranging from four to
six per cent in next 5 years. TV advertising contributes
approximately 40 per cent to the total advertising
spends in South Africa. Though market for TV advertising
is expected to grow, its share in overall advertising is
likely to fall slightly due to emergence of new media
advertising.24
Nigeria
Nigeria is one of the few countries in the world with a
projected CAGR of over ten per cent from 2014 to 2018.
Similar to the South African market, around 55 per cent
revenues in Nigerian TV industry come from pay TV
subscriptions and this percentage is likely to remain the
same for next five years. Number of pay TV subscribers

25. IT News Africa, January 2014
Kenya is a relatively small market for the TV industry

compared to South Africa and Nigeria. However, like
Nigeria, Kenya is one of the few countries in the world
with a CAGR of over ten per cent from 2014 to 2018.
Kenyan TV industry is expected to grow at a staggering
CAGR of 16 to 18 per cent till 2018.24
Kenyan TV industry is dominated by advertising with
approximately 80 to 90 per cent share in overall TV
industry revenues unlike South Africa and Nigeria,. Pay-tv
market in Kenya is still very nascent with a penetration
less than 10 per cent of the overall population in the
country.24
Compared to global TV industry CAGR of approximately
6 per cent, Kenya and Nigeria are expected to grow at
a much higher CAGR for next 5 years24. This depicts
that media industry players could have large potential in
setting / expanding their businesses in these countries.
However, there are some challenges identified in TV
industry in SSA one of the most important being
migration from analogue broadcasting to digital terrestrial
television (DTT).
With a rapidly approaching deadline of June 2015 for
migrating from analogue broadcasting (video and/
or sound) to digital terrestrial television (DTT), Africa
may face a tough challenge in bringing all stakeholders
including service providers, consumers, and regional
regulatory bodies on the same page. This deadline has
been set by International Telecommunication Union (ITU).
Once the deadline of June 2015 passes, it is understood
that there will be no more international support for
analogue spectrum.25
Within Africa, different geographies have set up different
deadlines for internal migration. For example, Kenya has
set a deadline of June 2014 for completing this migration
in a phased approach. Rwanda has set a deadline of July
2014 for this migration. Most African countries such
as Mauritius, Botswana, Kenya, Tanzania, and Nigeria
have made steady progress to successfully meet ITUs
deadline.25
However, notable exception in this list is South Africa.
South African government and their department of
communications have delayed this process for a long time
and now it looks unlikely that they will be able to complete
this migration before 2017.25
Main challenges in this migration include: lack of clear information of this deadline amongst all
stakeholders
confusion due to inadequate guidance procedures and

most importantly, supply and cost of set top boxes
(STBs) that enable consumers to receive digital

signals.26
After implementing DTT, process of TV content

broadcasting across various African countries is expected
to get smoother.
Most of Africa will not meet the ITU deadline and for the most part;
it is unlikely to matter at least not for the next year or two. When
the deadline passes, there will no longer be any international
protection for the spectrum that is used for analogue TV, so there
could be signal interference and degradation if other users are
allowed into the spectrum.
The real challenges are the pent-up demand for the spectrum to
be reallocated, to improve broadband access and provide better
quality of service and the ability of viewers to access digital TV
with analogue equipment. It is the latter that will impact the poorer
sections of the communities, as they will have to acquire new
aerials and set top boxes even if subsidised, it is likely to reduce
the number of people able to watch TV.
share of digital editions is likely to be in the range of only 8

to 10 per cent in near future. Digital editions typically offer
the same content to consumers at a discount of 20 to 30
per cent.27
The advertising market for South African newspapers has
stabilised now and is likely to remain in the range of 20
to 30 per cent of overall advertising market. On the other
hand, digital advertising is on the rise and could grow upto
a size of USD 50 to 60 million in next 3 to 4 years.27
In the current difficult trading climate our performance is quite

commendable but it doesnt mean theres no further space for
growth.
Theres a lot of scope to continue growing, not just the newspapers
but other sources of news such as social media and other digital
products.
September 2013
Mpumelelo Mkhabela
Editor of one of the leading dailies
in South Africa Sowetan
Source: financialmail.co.za
January 2014
Adrian Schofield, FCSSA, PMCSSA

Manager, Applied Research Unit,
Joburg Centre for Software Engineering
at Wits University
Source: IT News Africa, January 2014
Print
South Africa
Although circulation numbers are reducing, Print media
in South Africa is expected to grow at a nominal rate of
around 4 to 6 per cent. Only select newspapers such
as Sowetan and The Times have showed consistent
growth in terms of subscription numbers in last few
years. In terms of magazines, most categories including
consumer magazines and business magazines saw a
decline in subscription.27
As predicted by IMF, South Africas GDP is expected to
grow at a mere 2 per cent; however inflation is anticipated
to be at a higher rate. Hence, people are expected to
have lesser cash in hand, and hence reduced spend on
newspapers or magazines. Following the global trend
of subscription of newspapers and magazines in digital
format, South Africa is also expected to see a wider
community adopting digital subscriptions. Digital
editions will likely be taking the place of traditional print
editions of newspapers and magazines; however the
26. IT News Africa, January 2014
27. KPMG in India analysis and industry discussions conducted by KPMG in India
Nigeria
Compared to South Africa, Nigeria is a relatively small
market with a size of around USD530 million in 2013.
It is anticipated to grow at CAGR of around 5 per cent
and reach USD680 million in 2018. However, within
print media sub-sectors, the sub-sector of magazines is
expected to grow at around 10 per cent while the market
for newspapers is likely to grow at less than one per
cent.27
Revenues from circulation of newspapers and magazines
are likely to increase in the next four to five years while
revenue from advertisements is expected to have minor
variations. According to industry discussions, around 65
per cent of revenues come from print media circulation in
Nigeria.27
Kenya
Kenya has witnessed a rapid growth in its print media
sector which has risen from USD140 million in 2008 to
USD290 million in 2013. This growth is likely to continue
in near future as well with market size estimated to reach
around USD360 million by 2018.27 Print media in Kenya
is very strong as an emerging middle class looks out to
purchase newspapers and magazines. Though consumers
have shown interest in digital subscriptions of their
favourite print medium, it is expected to be in the range of
only 5 to 7 per cent of total subscription numbers.27
250
251
Advertising in print media is a big market and revenues

from advertising in newspapers are likely to constitute
over 55 per cent of the overall print media revenues by
2018.28
Films
African cinema has come a long way since its inception
in 1960s. At that time, films were primarily funded by the
French controlled Bureau of African cinema. This bureau
financed more than 65 per cent of the films produced in
SSA till 1980s.29
However, film making in Africa is going through a new
era. Several co-production treaties have been signed
by African production agencies which help them get
adequate funding, support in terms of film making, postproduction processing, and access to latest technology
etc. Nigerian films (Nollywood) which were previously
produced by local channels/producers are also now
increasing looking out for co-producers often based
outside Nigeria and SSA.30
Concentration of film production, 2011
No Data
No Film Production
20 Films or less
Between 21and 60 Films
Between 61and 100 Films
101 Films or more
Source: UNESCO Institute for statistics, July 2013
28. KPMG in India analysis and industry interactions

29. http://www.newafricanmagazine.com/features/culture/africas-film-industry-embracestransnationalism
30. Article by Lindiwe Dovey in New African Magazine, October 2012
Based on UNESCO data, only Nigeria had a high rate

of movie production. In Nigeria, on average, 966 films
released per year between 2005 and 2011 making it the
second largest movie producing country by numbers. But
the films produced in Nigeria were semi-professional/
informal productions, most of them with limited or no
theatrical release. Although 1,074 films were produced
in 2010 in Nigeria, national films sold only 117,563 tickets
(26per cent of market share of that year), in a country with
a population of about 160 million inhabitants.
Nollywood has changed the face of Africa; the

pictures we see are no longer those of starving
naked children, but rather the stories of our lives
as Africans, our work, our culture, our lifestyles.
- Joseph Tegbe
Partner,
Management Consulting KPMG in Nigeria
In fact, SSA countries feature in the lists of least number of

screens per 100,000 inhabitants (with population aged 5to
79) in 2011.31
Country
USA
Screens per 100,000

inhabitants
12
United Kingdom
China
Brazil
India
0.8
Sub-Saharan Countries
0.02 0.1
South Africa
According to a recent study conducted for the National
Film and Video Foundation (NFVF), South Africas film
industry has grown significantly since 2005, contributing
over USD300 million to the national economy in 2012 with
further growth expected over the next five years.
There are numerous advantages for South Africa in
terms of cinema production. South Africa is a prime film
location, offering a combination of film infrastructure,
attractive financial incentives with a favourable exchange
rate, a sunny climate and a wide diversity of spectacular
locations. Number of films produced in South Africa rose
from 5 in 2005 to 60 in 2012. Tsotsi, an internationally
acclaimed movie that won 2006s Oscar for Best Foreign
Language Film was produced in South Africa in 2006.32
One of the major reasons for filmmakers local as well
as foreign to choose South Africa as a filming location
is financial incentives offered by Department of Trade
and Industry (DTI). Foreign movie-makers who shoot
at least half their footage in the country and use local
post-production facilities can get up to 25 per cent of their
South African costs back, whereas local filmmakers can
get up to 35 per cent back.32
The study indicates that an additional 2,175 full-time
equivalent (FTE) jobs have been created and that there are
2,500 direct service providers in the film making industry
in South Africa.32
Additionally, South Africa has a healthy number of
advertising and television professionals. Animated films
have also have found a market in this region and film
makers are exploring this area as well.
Nigeria
Nigeria is the second largest film producing country in the
world and the only country in Africa to produce more than
100 films in a year.
31. Inputs from UNESCO Institute of Statistics around Digitization of Film Industry, August 2013 and
KPMG Analysis
32. Article in screenafrica.com on economy growth due to films, October 2013
A detailed analysis on Nollywood by KPMG in

Nigeria provides further insights:
The Nigerian film industry (Nollywood) is a critical component
of the countrys economy the fourth largest contributor to
Nigerias GDP in 2012-2013, with revenues in excess of USD500
million annually. Although the industry is largely fragmented
and unstructured, it is also the highest employer of labour after
agriculture.
The industry has largely grown on the back of the entrepreneurial
prowess and passion of indigenous film producers/ distributors,
cast and crew. Next to football, Nollywood is the other key unifying
source of entertainment that has captured the hearts of Nigerians
at home and abroad. This is largely driven by the fact that film
producers have focused on local content that its target audience
can relate with. Considerable emphasis is placed on the multilingual nature of the population. In 2013, Nollywood produced
titles in close to 10 languages with most of the movies produced
in English, Yoruba and Hausa. In addition, most movies follow a
narrative story telling format and are based around themes such
as social, cultural and family issues, across various genres and
are mostly targeted at mature audiences. Nollywood movies are
typically shot on celluloid, released directly to DVDs/VCDs and
on average are produced within two to four weeks on a budget of
USD20,000 (for low budget movies).
In addition, Nollywood has contributed significantly in projecting
Nigeria and Africas image globally, with the themes and story lines
resonating with Africans and black communities all over the world.
The soft power created by these movies has led to a change in the
face of Africa and how Africa is perceived overall, with Nollywood
actors and languages becoming increasingly popular in large
cities across Africa. In addition, it has led to the growth of the film
industries in Ghana, Kenya and Liberia. Nollywood has also been
heralded as a driver for Africas tourism industry potential.
Nigerian films produced in English have an international appeal
and are now released outside Nigeria, in US and UK cinemas
and at international film festivals. Popular Nollywood movies
premiered abroad include Tango with Me, Flower Girl, Mirror
Boy, Across the Niger and Return of Jenifa. There has also been
increased collaboration with Hollywood actors, with a couple of
appearances by Hollywood actors in some local productions such
as Hakeem Kae Kazeem in Last Flight to Abuja and Chiwetel Ejiofor
and Thandie Newton in Half of a Yellow Sun. This has helped to
increase the recognition and profile of the movie industry and it is
expected that the trend will continue with Nigerian actors moving
on to the Hollywood scene. This is riding on the back of the music
industry, which has seen several collaborations with international
music stars and even international deals with Nigerian artistes.
Contrary to mature markets, more than 95 per cent of Nollywood
movies are released directly on DVD/VCDs. Beyond the traditional
means of distribution, online sources such as iROKOtv, known as
the Netflix of Africa (allows users to stream exclusive Nollywood
films for about USD5 per month) are beginning to gain ground. The
sharing of broadcast syndication rights with large pay TV digital
networks has also helped to redefine the shape of the industry;
producing other avenues for film producers to monetise revenues.
Producers are also exploring components such as in-cinema
advertising, product placements, and merchandising to enhance
revenue capabilities of Nollywood movies.
However, despite Nollywoods strong positioning and exciting
future prospects, the industry faces key challenges across the
production, distribution and exhibition phases, which need to be
addressed in order to maximize the industrys potential, move theon
past successes.
252
253
Film Financing continues to be a key challenge for the industry, as

there are currently no formal financing mechanisms. Even with
the provision of grants and loans supported by the government,
many key stakeholders are still unable to access funds, due to
mainly a lack of understanding of how film financing works and
the absence of formal operating structures on the part of industry
players, among other factors. As a result, the major source of
funding remains reinvested profits from previous productions
(and support from family, friends and associates) to support
typical budgets of between USD20,000 to USD250,000. Limited
funding leads to other challenges such as absence of world class
equipment, shooting in outdoor locations without any concept of
studios, and significant skills gaps.
Although Nollywood is the second largest film producing industry
globally, its ability to monetise revenues from film production
is significantly hampered by the limited number of cinemas/
screens available across the country (approximately 0.8 screens
per million), the high level of piracy in the industry and the quality
of content produced.
Poor content quality often implies that a good number of
movies produced are not cinema worthy and therefore cannot
be released theatrically both in the domestic and international
markets, which are key sources of revenue for movie production.
As a result, movies typically earn 50-60 per cent of their revenues
from sales of DVDs and VCDs, which typically occurs within two
to three weeks of the films release. This in turn can lead to a high
rate of piracy and copyright infringements.
Given the strong national and international following of
Nollywood movies, the nascent nature of the industry and gaps
and opportunities across various segments of the value chain, the
Nigerian film industry seems to be at the tipping point and at the
cusp of phenomenal growth. However, appropriate investments
and structures need to be in place to address the key challenges
facing the industry. This, we believe, is a joint effort, on the part
of current stakeholders, potential investors and the government.
The quality of content produced needs to be improved; piracy
issues need to be addressed; stakeholders need to have
structures, systems and processes that can enable easier access
to finance; distribution and exhibition channels need to be
significantly increased and/or revamped; need for supporting
infrastructure including adequate power supply and increase
in broadband penetration; enabling laws need to be enforced
and/or rejigged; and the industry needs to refocus on new ways
of working through training, knowledge building forums and
capacity development.
Nollywood is our shining light. Whenever I travel abroad; many of

my colleagues ask me about Nollywood.
Goodluck Jonathan
President Nigeria, May 2013
Source: UN
One of the reasons the Nigerian film industry hasnt developed is

that they havent had access to formal financing.
Yewande Sadiku
Executive Producer
Half of a Yellow Sun, 2013
Source: UN
Only less than five per cent of Nollywood movies are cinema
worthy and can generate reasonable revenue; exhibitors are
interested in showcasing movies that are commercially viable.
Kene Mparu,
MD,
The Film House Cinemas, 2013
Source: Industry discussions by KPMG in India
Opportunity offered by exhibition business in Nigeria

The exhibition infrastructure in Nigeria is still at its infancy leading
to approximately 95 per cent of all Nollywood movies releasing
directly on DVD/VCDs. The country had an estimated 108 screens
in 2013 with a view to reach 275 screens by 2020, which means an
addition of ~160 screens in the next 7 years. This is in stark contrast
to India, where the leading player alone adds ~50 to 100 screens
each year.
In terms of screen density, Nigeria at 0.5 screens per million people,

falls grossly behind other film consuming economies such as US,
China, Brazil and India. While some players such as Silverbird
Cinemas, Genesis Deluxe Cinemas and FilmHouse have recognised
the market potential and set-up operations, there is still a large
demand supply gap presenting an opportunity to other national
and global players. Development of exhibition industry is expected
to be a key driver to help ensure the profitable growth of the
Nollywood film industry, as currently the theatrical revenue stream
is extremely small.
Source: KPMG in India analysis; Industry discussions conducted by KPMG in Nigeria; http://natoonline.org/data/us-movie-screens/
New Media
Consumers in Africa are getting easier to reach due to a
remarkable uptake of mobile services. Mobile penetration
in Sub-Saharan Africa was around 70 per cent in third
quarter of 2013 much lower than the global average of
92 per cent and compared to 30 per cent penetration in
SSA in 2008. However, it is on a rise and this significant
mobile adoption by consumers has made it easier to reach
consumers through mobile marketing, competitions and
promotions.33
The countries with the greatest number of year-on-year
net additions of mobile subscriptions for third quarter of
2013 were: Nigeria, Democratic Republic of Congo, Mali
and Ghana. In terms of mobile subscriptions per country,
Nigeria leads, followed by South Africa, Kenya, Ghana
and Tanzania. Total mobile subscriptions are forecasted
to increase from more than 560 million in 2013 to around
930 million by the end of 2019.34
According to an IDC report released in December 2013,
the number of mobile connections in the three major subSaharan countries South Africa, Kenya and Nigeria is
expected to grow 28.2 per cent next year to reach 55.8
million. Also smartphone spending in SSA is expected to
increase by 6 per cent in 2014 while feature phones will
decrease by 11 per cent. Based on a survey by telecom
giant Ericsson, 80 per cent of all mobile subscriptions in
SSA will be 3G/4G by end of 2019.
An app culture is strongly evolving where the most

common types of apps to be downloaded are those for
banking. Mobile finance services have a strong growth
potential in the region due to an array of banking apps
being introduced from mobile operators and established
banks, as well as the fact that many people do not have
access to traditional banks.36
Adding to this is the increase in international bandwidth
availability to Africa as eight countries in SSA already offer
high speed wireless network called LTE services while
five others are actively exploring it.36
These are key levers in driving the content creation and
new business models based on digital media.
MXit (Free online mobile chat service) has applied three key
strategies in accessing lower income African consumers.
Firstly, MXit has kept its product simple, minimizing customization.
Secondly, MXit has improved reach through accessing early
adopters in communities and ensuring that users are constantly
educated about new services. And lastly, MXit ensures that it
understands and appeals to its target consumers most basic
needs, which can often be misunderstood if there is not sufficient
research.
Herman Heunis
Founder and Managing Director,
MXIt (Free Mobile Chat Service)
Growth in mobile data traffic in SSA is expected to

surpass mature markets like UK in next 5 years. While
mobile data usage is expected to increase 11 times in UK,
it is expected to increase 17 times in SSA.35
With social media apps now coming pre-installed in most
smartphones, consumers are feeling always connected
to the world where they can express their opinions, get
updated with latest news around the world, enjoy videos,
listen to radio on the go.
33. Inputs from Accenture report on African Consumer Markets (2011), Ericsson Mobility Report on
Sub-Saharan Africa (2013)
34. Ericsson Mobility report for Sub-Saharan Africa (2013)
Source: financialmail.co.za
35. Inputs from TechWeekEurope and Cisco Report on Mobile Data Traffic in UK (2014)
254
255
Online
Internet usage in South Africa has more than doubled
in the last four years. According to recent State of the
Newsroom SA 2013 study conducted by Wits Journalism,
one in three adults in South Africa last year - 12.3 million
people - was on the Internet and the figure is expected to
double by 2016.
In South Africa, the Government is gearing up to roll out
broadband access to every citizen by 2020.
As per the Economist, Kenya is probably SSAs most
sophisticated digital nation boasting of around 18 million
internet users and a staggering 99 per cent of the internet
traffic coming from the mobile phones.37
In SSA, many consumers experience the internet for the
first time in black and white on their low cost phones.
Non-availability of smartphones in masses and patchy
yet expensive mobile data connectivity may have led
to development of unique digital services in SSA. For
example, M-Pesa, one of the leaders in mobile money is a
Kenyan SMS based payment service with over 15 million
subscribers and an application programming interface
(API) enabling several African start-ups.37
Similarly, 2go, a Nigerian portal competing with Facebook,
became profitable just after 4 years of launch and
had around 9 million users by then. It also focuses on
providing social media functionalities but on regular
phones.37
In 2010, Kenya exported around USD360 million worth
of technology related services up from USD16 million
in 2002. Based on JBB research, Kenyan mobileentertainment market was around USD165 million in
2013. There are innovative start-ups like Planet Rackus
that have come up with mobile games which are now

available for download in Nokia store, Google Play store
as well.37
Pay TV
The migration to digital broadcasting across the globe
has likely spiked the demand for high quality content and
pay-tv model seems to have gained momentum in last
few years. Most pay-TV providers are offering increasingly
content-hungry consumers quality programmes. Hence,
the pay-tv industry is poised to possibly play a preeminent role in the unfolding digital TV era.
The model thrives on the innovative creation and delivery
of superior television content. Quality content, Quality
sound, Quality picture and Quality service are the four
pillars. Often it is predicted that internet will soon slowdown the progress of pay TV; however global revenues
in pay TV are on the rise. The amount reached USD184
billion in 2012 compared to USD135 billion in 2007 and is
expected to hit USD225 billion by 2017.38
Social networking
In one of the recent surveys, most Africans have opined
that they want and prefer to use internet for social
networking. The results were similar irrespective of the
mode of using internet i.e. with PC/laptop/tablet or with
mobile.39
Percentage of conducting a particular activity by frequent users while connected

to internet
Social networking
55
39
Email
31
News reading
36
41
Instant messaging
35
25
Information search
19
Gaming
Online bookings
Travel bookings
32
20
14
14
Blogging
Online shopping
45
38
38
Music / Video
10
10
10
10
13
12
Source: African consumer insights report by McKinsey & Company
37. Inputs from Media Map 2013 by Bonnier R&D

38. Business Daily Africa, August 2013
39. Inputs from African Consumer Insights report by McKinsey and Company
Consumers using mobile phone
Consumers using PC, Laptop or Tablet
57
Video streaming and Video on Demand

Video streaming is also seen as one of the growing
market in the digital media space. Many operators are
getting together in SSA to provide digital media content
to their consumers. MTN has partnered with True African
(Uganda) and MultiChoice (Nigeria).40
VoD is the latest platform on which rapidly growing
Nigerian Film Industry, Nollywood, is becoming a global
brand. Nigeria opened the market for digital licenses of
films in 2010, thereby adding a new revenue stream for
the producers. Similar to Netflix in the US, a few VoD
providers such as iROKOtv, Afrinolly, and Pana TV have
started providing services in Nigeria in recent past.40
VoD service providers are coming up with innovative
schemes to lure customers. Pana TV has struck a deal
with Samsung and will see the Pana app pre-installed
on every piece of the electronics giants kit sold on
the African continent while Afrinolly has achieved half
a million downloads in its first 10 months of offering
Nollywood content online.40
However, there are major challenges related to VoD. They
include:40
Slow, patchy and expensive internet connectivity

When iROKOtv, one of the VoD service providers in
Nigeria, started the service, the founder had to collect
the films on a hard drive and upload them from United
Kingdom (UK) since local internet connectivity was
extremely slow. It was expensive as well.
Foreign M&E players in

Middle East and Africa (MEA)
market
As described earlier, MEA is one of the fastest growing
regions in the world in terms of M&E sector and there
is plenty of potential for players in traditional as well as
new media. United Arab Emirates (UAE), Qatar, and Saudi
Arabia are the focus countries in Middle East and North
Africa (MENA) region while South Africa, Nigeria and
Kenya are expected to grow faster than other countries in
Sub-Saharan Africa (SSA).
Several multinational players have set up their bases in
MEA region and are leveraging on the rapidly growing
high class infrastructure and government support in terms
of establishing academies, forming alliances with local
entities, financial incentives, facilities required for content
production as well as post-production activities.
An illustrative list of multinational players operating in
MEA region includes:
Sky News Arabia - Setup as a Joint venture between
British pay TV player BSkyB and Abu Dhabi Media

Investment Company, it operates a 24 hours news
service channel in MENA.41
Ubisoft - One of the leading publishers of video games,
Ubisoft has setup a development studio and a gaming

academy in Abu Dhabi.42
Cartoon Network Arabia - Time Warner Company setup
Poor electricity supply

Problem of patchy internet connectivity is coupled with
poor electricity supply in the country. Even the capital city
of Lagos faces electricity shortages.
Legal disputes
Afrinolly and iROKOTv are in a legal dispute about
whether the former is making money from content the
latter has paid to have exclusively.
To overcome internet connectivity challenges, firms are
looking at technological solutions that can allow streaming
on mobiles and tablets even when the signal is low. In the
worst case scenario, content can look grainy; however
it may still be better than having nothing available.
This is expected to bring confidence in consumers in
terms of workability of VoD and could change the whole
market completely. With growing number of 4G LTE
implementations currently running in Africa, VoD is
expected to become a smooth and enjoyable experience.
Cartoon Network Arabia in 2010 to provide content

in Arabic language. In addition to this channel, Time
Warner Company has also setup Cartoon Network
Academy recently in Abu Dhabis media zone,
TwoFour54, to provide training in various animation
techniques.41
Fox International Channels - News Corps Fox
International offers 13 channels in MENA through

Free-to-Air satellite and pay TV through its regional hub
in UAE. A mix of Arabic and international content is
distributed over these channels.41
Key multinational players operating in SSA include:

Bloomberg TV In 2013, Bloomberg TV announced a
partnership with Nigerian content provider, Optima

Media Group (OMG), through which Bloomberg airs
3 to 4 hours of television content per day. Content is
produced in Lagos, Johannesburg, and Nairobi in SSA
while international feed comes from London. Content
is packaged and distributed through satellite and IPTV
as well as in traditional terrestrial formats.43
Fox International Channels Fox international channels
has an office in Johannesburg (South Africa) and

it offers international content to its viewers in SSA
through pay TV providers such as DSTv and StarSat
(erstwhile TopTV).40
40.
41.
42.
43.

The Hollywood Reporter Magazine, October 2012
http://www.ign.com/articles/2013/01/02/ubisoft-opens-abu-dhabi-studio
Bloomberg press release, 28 February 2013
256
257
In addition to the multi-national players, some of the

Indian players have established a strong presence in
MEA region in TV, radio, and print media. Particularly,
within GCC region, Indian M&E players have tremendous
potential as more than 36 per cent of the overall GCC
population comprises Indian expatriates. In the UAE,
Indian expatriates account for ~70 per cent of overall
population of UAE. In addition to Indians, expatriates from
Pakistan and Bangladesh in GCC countries also form part
of the consumer community for M&E sector.44
Some of the Indian players operating in MENA region
include:
Zee Network Zee is one of the major Indian players
operating in the MEA region. Zee started its operations

in MENA in 1994 and extended its presence to Africa
in 1996. Its portfolio of 20+ channels is distributed
through Free-to-Air satellite, Over-the-Top TV (OTT)
as well as IPTV networks such as eLife in UAE. The
portfolio includes popular channels such as Zee Tv, Zee
Cinema, Zee Cafe, Zee News, Ten Sports as well as
regional channels such as Zee Marathi. In addition to
distributing Indian content in the region, Zee has also
content produced in Arabic with shows such as Zee
Connect. 45
Zees movie channel, Zee Aflam, had reached a level

of 49.7 GRPs with a share of around 12.8 per cent
in MENA in 2012. Also, in 2012, Zee launched its 24
hours Arabic channel Zee Alwan. Recently, Zee also
announced its plans to launch two new HD channels in
the region.46
Zees Ditto TV, an OTT distribution platform, offers
live TV programmes, VOD, Music, News on internet
enabled devices such as laptops, tablets, smartphones
and desktops. Ditto TV is currently available in markets
such as UAE; however it is expected to be made
available in rest of the region soon. Further, content
offered on Ditto TV includes Zees programmes as
well as content from Multi Screen Media (Sony
Entertainment Television), TV Today Network, BBC,
Viacom18 network.
44. GCC as an Investment Destination by Alpen Capital, 5 November 2013

45. Interview of Mr Mukund Cairae, CEO MENA and Pakistan, Zee Network, published on
mediavataar.com, 13 May 2012
46. Zee TV
Other players in TV industry Apart from Zee, majority
of the Indian television content producers such as B4U,

UTV, NDTV, and Sony Entertainment Television have
partnered with UAEs eLife (IPTV platform) to distribute
their content to Asian consumers. Recently, Star India
partnered with eLife to distribute a portfolio of 17
channels in 6 languages including popular channels
such as Star Plus and Star Gold in UAE.47
Gulf Madhyamam Gulf Madhyamam is the first
newspaper in Malayalam to be published outside India.

Owing to the needs of huge expatriate population in
GCC region, Gulf Madhyamam started operations
in Bahrain in 1999. Currently eight editions of Gulf
Madhyamam are published from various cities in
MENA
Radio Mirchi Radio Mirchi started its operations in
UAE in 2012 through an association with Abu Dhabi

Media Company. Radio Mirchi in UAE provides content
in Hindi and English. It is one of the leading private
radio stations in India operating across 32 stations in 14
states with more than 41 million listeners
In SSA region, Indian television content is distributed

through regional IPTV providers. For example, Zuku TV
offers Indian content providers such as Star India, Sony
Entertainment Television, UTV, B4U, and Zee through
its fiber optic network and through satellite TV in Kenya,
Uganda, Tanzania and Malawi with plan to expand
operations in Ethiopia, Eritrea, South Sudan, Rwanda,
Burundi, and Zambia soon.48
Additionally, some of the Indian TV content producers
have partnered with Glow TV, a regional FTA channel
in South Africa to air select shows such as Bade
Achhe Lagte Hain, Kya Huaa Tera Vaada (from Sony
Entertainment Television), Koffee with Karan (Star India)
etc.49
47. Television Post, 7 February 2014

49. Article published on indiantelevision.com, 6 November 2013
Conclusion
Middle East and Africa (MEA) is the fastest growing
region for M&E sector in the world with a projected
growth rate of 12 to 14 per cent50. Additionally, with worldclass events such as Expo2020 and football world cup
taking place in next 8 to 10 years, there is tremendous
potential available for companies around the globe
operating in M&E and advertising sector to expand their
business in this region.
While traditional media such as TV, films and print are
expected to hold their share strong, new media such as
digital, online and social are also getting momentum at a
rapid rate in the region due to high percentage of young
population in the region. UAE, Qatar, and Saudi Arabia
are expected to be the focus countries in MENA for the
next five to seven years, and in sub-Saharan Africa, South
Africa, Nigeria, Kenya will likely be positively looked upon
by the M&E sector companies.
In terms of setting up businesses, numerous multinational companies such as Fox Studios, Sky News,
Cartoon Network, Bloomberg have already setup their
base in MEA and several other companies are actively
looking to enter this lucrative market.
Films and TV content production and distribution have

been one of the most preferred sub-sectors for Indian as
well as multi-national players to operate in MEA market.
Indian media players such as Zee, Radio Mirchi and
Madhyamam are successfully operating in the region
in radio and print media segment. The players looking
at these markets need not be limited to targeting the
diaspora alone as even the local population in these
regions can present an attractive market, which has been
demonstrated by players in other sectors as well like
Telecom, Automobiles etc.
A large consumer community (including 36 per cent of
overall population as Indians in GCC region)50; high quality
infrastructure for ICT, production and post-production
of content; abundance of filming locations and support
offered by governments are can be the pillars of growth
for Indian M&E sector players in this region. With an
encouraging outlook estimated for next 5 to 7 years,
Indian players could leverage on the strengths and
potential offered by this region and extract significant
business value.
258
14
Tax and regulatory
Navigating through tax complexities
There are several ambiguities surrounding the

applicability of Rule 9A/9B, including whether it
extends to satellite, music, home video and other
rights in addition to theatrical rights, whether it is
directory or mandatory, whether it overrides all other
provisions of the Income-tax Act, 1961 (IT Act), (for
example, whether the deduction of expenditure under
Rule 9A/9B is allowable irrespective of whether it is
capital or revenue in nature, whether tax has been
deducted at source or not), deductibility of expenses
which are not covered by Rule 9A/9B, etc.
The tax environment in India is quite challenging. Thanks

to the ingenuity of the tax payers and the aggression
of the tax authorities, the year gone by has witnessed
some of the most innovative and unprecedented litigation
on the tax front in India. The tax developments in India
are being tracked globally with bated breath, be it tax
implications of issue of shares by an Indian company to its
overseas parent, uncertainty surrounding indirect transfer
of shares, withholding tax on payment towards software,
connectivity payments etc.
Given the uncertain political scenario in the country
and impending general elections, the fate of the
implementation of the proposed Direct Taxes Code Bill
and the Goods and Services Tax Bill, which are intended
to address some of the woes of the taxpayers, remain in
the dark.
A Government Circular or clarification on the above

aspects could help dispel this uncertainty.
Under the IT Act, payments to Indian residents towards

acquisition of copyright in content (for example,
satellite rights, home video rights, music rights, etc.)
attract a 10 per cent withholding tax (under Section
194J). This withholding rate is excessive considering
the profit margins prevalent in the industry and it has
an adverse impact on taxpayers cash flows. It could
be worthwhile for the Government to consider a lower
withholding tax on such payments.
Talking about the M&E sector, amidst the sluggish growth

of the economy, the growth in the M&E sector has been
commendable and the sector has stood strong in these
difficult times. However, the myriad of taxes in various
forms and multifarious statutory compliances, are, to
an extent, playing spoilsport. The industry has been
burdened with the varied stream of direct and indirect
taxes viz. entertainment tax, service tax, VAT, income tax,
etc.
Several issues such as dual levy of tax, i.e. service
tax as well as VAT on licensing of copyrights in certain
cases, uncertainty regarding withholding tax on various
payments made by the broadcasters, withholding tax
on discount on sale of Set Top Boxes/recharge coupon
vouchers in the case of DTH industry, uncertainty
surrounding taxability of foreign sports associations,
teams and players, etc., are being faced by the tax
payers in the M&E sector. These issues have been long
outstanding and require utmost attention and addressal
by the Government.
On the regulatory front, the Telecom Regulatory
Authority of India has recommended revision of foreign
direct investment limits in certain segments. If these
recommendations are accepted by the Government, it
could boost investment in the sector, leading to further
growth.
The key tax and regulatory issues/developments relating
to the M&E sector are discussed in this chapter.
Film industry
Key Tax issues
Deduction of expenses
The Income-tax Rules, 1962 (Rule 9A and 9B) permit
deduction of expenditure incurred on production of
films / acquisition of distribution rights therein either in
the first year of release or over a period of two years,
based on when the copyrights/distribution rights in the
films are exploited or depending on the date of release
of the film.
Tax withholding on acquisition of copyright
Service Tax on fees of actors / technicians

Revenues earned by film producers from the licensing
of copyright in cinematographic films for exhibition
in cinema hall/theaters, are exempt from service tax.
However, the producers of cinematographic films avail
various input services (such as services of actors and
technicians) which are liable to service tax. Accordingly,
there is substantial loss of CENVAT credit on inputs/
input services attributable to revenue from exhibition
in cinema hall/ theaters. This results in a huge cost for
film producers and could be avoided by exempting the
input services of actors and technicians from levy of
service tax.
Recent developments
Levy of service tax on distributors / sub

distributors / exhibitors of movies
Producers, distributors, sub distributors and exhibitors
of movies, enter into different kinds of arrangements
for the exhibition of movies. These arrangements are
either entered into on a principal to principal basis
(where the movies are exhibited by the exhibitor on
his own account) or on behalf of the distributor/sub
distributor/producer, or on a revenue sharing basis.
Under the negative list regime, the explanation to the
definition of service states that, for the purpose of
Service Tax law, an unincorporated association or a
body of persons, as the case may be, and a member
thereof shall be treated as distinct persons.
260
261
In addition to the above, the Guidance Note at para

2.4.3 of the Education Guide (dated 20 June 2012)
also states that the services provided, both, by the so
constituted Joint Venture (JV) or profit sharing association
of persons (AOP), as well as by each of the individual
persons constituting the JV/AOP will be liable to be taxed
separately, subject of course to the availability of the
credit of the tax paid by independent persons to the JV/
AOP, and as otherwise admissible under the CENVAT
Credit Rules, 2004.
The Mumbai Tribunal held that according to Income

Tax Rules, a feature film is to be given a treatment
not different from that given to an article or thing
which is manufactured. Therefore, a film, which for
some reason has been abandoned, should not be
treated differently than stock-in-trade which has lost
its value. Accordingly, the Tribunal held that the cost of
production of the incomplete project should be allowed
as a business expenditure on its abandonment, unless
such abandonment is temporary.
In view of the above, all types of revenue sharing

arrangements between the producers, distributors,
sub distributors and exhibitors of movies will be subject
to service tax, except for revenues from licensing of
copyright in films for exhibition in cinema hall /theatres,
which are exempt from service tax.
KPMG in Indias comments
Prior to issuance of the aforesaid Guidance Note, there

was also a Circular1 issued by service tax authorities,
which clarified that levy of service tax would not depend
on the nature of such arrangements but on the nature of
the transaction involved. Thus, service tax was applicable
on the exhibition of movies by the exhibitor, whether
the arrangement with the distributors was on a principal
to principal basis or on behalf of the distributor/sub
distributor/producer or on a revenue sharing basis.
The aforesaid Circular has been upheld by the Madras
High Court2, wherein it has been held that having regard
to the various modes of arrangements between the
distributors/ sub distributors and exhibitors of films,
CBEC was justified in issuing the said Circular, clarifying
the transactions between distributors/ sub distributors
and owners of theatres and the levy of service tax
thereon.

Given the above, the services provided, both, by the
unincorporated JV or profit sharing AOP, as well as
by each of the individual persons constituting the JV/
AOP will be liable to be taxed separately, subject to
availability of credit to the JV/AOP of the tax paid by
independent persons and as admissible under the
CENVAT Credit Rules, 2004.
Judicial decisions
Abandoned film project expenses allowed as

revenue expenditure
In the case of A.K. Films Private Limited3, the taxpayer
who was engaged in the business of producing feature
films and television programmes incurred expenditure
on a film which was subsequently abandoned. The tax
authorities held that feature film, being a capital asset
in the hands of the producer, any loss arising from the
abandonment of film cannot be treated as revenue
loss and accordingly, disallowed the expenditure on the
abandoned film.
01. Circular No. 148/17/2011 dated 13 December 2011

02. Mediaone Global Entertainment Ltd (2013-TIOL-516-HC-MAD-ST)
This is a welcome decision, which is expected to provide

some respite to the film producers in respect of the cost
of abandoned films. Non grant of deduction in respect
of cost of abandoned films could have added to the
woes of the producers, who could have already suffered
substantial loss by incurring such expenses.
Interest on loans availed for production of

films not exhibited during the year
In the case of Firoz Nadiadwala4, the taxpayer incurred
interest expenditure on loans taken for the cost of
production of films which were not released during
the year. The taxpayer claimed the interest expenditure
incurred during the period, as deduction, while
computing its business income under Section 36(1)(iii)
of the IT Act.
However, the tax authorities held that the interest paid
on borrowings, specifically taken for production of
films, which were not released during the year, needs
to be considered as per Income Tax Rules (Rule 9A) and
not under Section 36(1)(iii) of the IT Act.
As per Rule 9A, deduction of expenditure incurred on
production of films (i.e. cost of production of films)
is allowed either in the first year of release or over a
period of two years, based on when the copyrights
in the films are exploited or the date of release of the
film. One of the key issues before the Mumbai Tribunal
was whether the aforesaid interest formed part of cost
of production as per Rule 9A.
The taxpayer argued that, the interest expenditure
incurred during the period is to be allowed as deduction
under Section 36(1)(iii) of the IT Act as the borrowings
were made for the purpose of business and not
as per Rule 9A. However, the Tribunal rejected the
arguments of the taxpayer and held that Rule 9A is to
be mandatorily applied for determining the expenditure
in respect of the films. It held that the interest on
borrowings specifically taken for the production of
the two films has to be considered as part of cost
of production of the films allowable in the year of
release of the films and not in the period in which such
expenditure was incurred.
03. ACIT v A.K. Films Private Limited (I.T.A. No. 5980/Mum/2012)

04. Firoz Nadiadwala v Addl. CIT (2013) 143 ITD 551 (Mumbai)

The Courts, in the past, have generally taken a view
that deductibility of the expenditure relatable to the
production of the film (which is otherwise allowable
under the provisions of the IT Act) has to be determined
in accordance with Rule 9A. The Tribunal in the above
case has reaffirmed this position by holding that interest
expenses incurred vis--vis loan specifically taken for
production of films is allowable as per provisions of Rule
9A.
Broadcasting Industry
Key Tax issues
TV channel companies make significant payments to

software production houses towards production of
TV programs. They also pay placement/carriage fees
to DTH operators, multi system operators and various
cable operators towards placement/carriage of the
channels. The channel companies are of the view that
such payments attract TDS under Section 194C of
the IT Act at the rate of 2 per cent. However, the tax
authorities contend that such payments are liable for
TDS at 10 per cent on the ground that the payments
are towards technical services/royalty. This has
resulted in protracted litigation.
Transfer of copyright in a feature film for 99

years - sale and not royalty
A suitable clarification by the Government to the effect

that tax needs to be deducted on the above payments
at the rate of two per cent and not at the rate of 10 per
cent is much needed to put the above controversy to
rest.
In the case of K. Bhagyalakshmi5, the taxpayer was

engaged in the business of purchase and sale of films.
It entered into an agreement with an Indian entity for
acquisition of film rights for a period of 99 years.
The taxpayer was of the view that with the payment
being towards purchase of cinematographic film, no
tax was required to be deducted from such payment.
However, the tax authorities held that it is not a case of
sale but a case of a mere grant of satellite right in the
movie by the film producer. Accordingly, the payment
made for transfer of such right would fall within the
meaning of royalty under the IT Act, subject to tax
deduction at source (TDS) at 10 per cent under Section
194J. The deduction in respect of the payment was
disallowed for non-withholding of tax under Section
194J.
The tax authorities have been contending that such

discount is in the nature of commission or brokerage
paid by television channels to advertising agencies and
accordingly, is liable to withholding tax at 10 per cent
under Section 194H of the IT Act.
However, taxpayers believe that the aforesaid discount
given to advertising agencies is not in the nature of
commission or brokerage and hence, not liable for
TDS under Section 194H of the IT Act. The above
controversy has resulted in protracted litigation on the
matter. It is imperative that the Government issues a
clarification on the matter to avoid this litigation.
05. K. Bhagyalakshmi v DCIT (2013) 40 taxmann.com 350 (Madras)

06. Asia Satellite Telecommunications Co. Ltd 197 Taxman 263 (Delhi HC)
Discount given to advertising agencies by

broadcasters
Generally, advertising agencies purchase
advertisement airtime from broadcasters for
placement of advertisement of their clients on
the television channels of the broadcasters. As a
customary practice followed by the broadcasting
industry, the invoice raised by them on advertising
agencies reflects standard commission (i.e. discount)
of 15 per cent.
The High Court held that as per the Indian Copyright

Act, 1957, copyright in a cinematographic film subsists
until 60 years, whereas the taxpayer has acquired
the rights for 99 years. Therefore, the High Court held
that the transaction can only be treated as a one of
sale which would be excluded from the definition
of royalty under the IT Act. Accordingly, the tax
payer was justified in making the payment without
withholding of tax under Section 194J of the IT Act.
This is a welcome ruling holding that payment towards

acquisition of film rights for period exceeding 60 years
would not be subject to TDS. This is expected to help
producers in avoiding substantial funds getting blocked
in TDS, and thereby improving their working capital
position.
TDS on various payments by TV channel

companies
Taxation of Transponder charges

Broadcasting companies make payments for
transponder charges to the satellite companies for
transmission of their TV signals. The tax authorities
contend that payments made towards transponder
charges are in the nature of royalty. However, in the
case of Asia Satellite Telecommunications Co Ltd
(Asia Sat)6, the Delhi High Court has held that such
payments do not constitute royalty and are not liable to
tax in India.
With a view to override the above decision, the
definition of royalty under the IT Act was amended
vide the Finance Act, 2012, to bring within its ambit
payments made for transmission of signals by satellite.
262
263
Recently, the Delhi High Court in the case of TV Today

Network Limited7 affirmed the taxability of payments
towards transponder charges as royalty under the IT
Act, in view of the retrospectively amended definition of
royalty.
Judicial decisions
However, non-resident taxpayers can continue to take the

benefit of tax treaties entered into with India to contend
that such payment is not in the nature of royalty under the
treaty and hence, not liable to tax in India.
In the case of Endemol India Private Limited9, the

taxpayer was engaged in the business of providing
and distributing television programmes. It produced
a reality show for which the shooting was required to
be carried out in Argentina. It engaged an Argentinian
company for providing line production services in
Argentina. The taxpayer approached the Authority for
Advance Rulings (AAR) to determine the taxability of
the amount paid to the Argentinian company.
Taxation of Foreign Telecasting Company

(FTC)
The two primary sources of revenue for FTCs are
income from sale of advertising airtime on the TV
channel and subscription revenues.
The AAR held that services rendered for production

of programmes for the purpose of broadcasting and
telecasting has been specifically characterised as
work for the purpose of Section 194C. Accordingly, it
will not be appropriate to treat the payment as Fees for
Technical Services (FTS) under the provisions of the IT
Act.
Taxation of advertisement revenues

Under the IT Act, advertisement revenues of FTCs
are taxable in India, in case FTCs have business
connection in India. In case an FTC operates from
a country with which India has a tax treaty, the
advertisement revenues would be taxable in India
only if the FTC has a permanent establishment (PE)
in India. The taxability in such cases is only on the
income which is attributable to the PE / operations
carried out in India. The circumstances in which the
FTCs constitute a PE/business connection in India
and the determination of income attributable to such
PE/operations carried out in India, continues to be
a contentious issue between the FTCs and the tax
authorities.
The AAR held that when such services are specifically

categorized as work for Section 194C, then the
income therefrom should be treated as business
income. Accordingly, it was held that in the absence of
PE of the Argentinian company in India, its income was
not taxable in India.
FTCs generally appoint agents in India for marketing

advertisement airtime slots. Agents also facilitate
collection of advertisement revenues from advertisers
and its remittance abroad. The tax authorities contend
that the agent of the FTC in India constitutes its PE in
India for various reasons.
The Bombay High Court in the case of SET Satellite
(Singapore) Pte. Ltd.8 has held that where an FTC has
an Agency PE in India (i.e. PE on account of its agent),
a payment of arms length remuneration by the FTC to
its Indian agent extinguishes its tax liability in India. A
similar view has been taken by the Delhi High Court
in the case of BBC Worldwide Ltd. The matter is now
pending before the Supreme Court.
Taxation of Subscription revenues
Subscription revenues are generally collected by the
Indian distributors and subsequently paid to the FTCs.
FTCs are of the view that the payment for grant of
distribution rights is not for any copyright and hence, is
not in the nature of royalty (which is taxable on gross
basis at a specified rate). FTCs are of the view that the
payment is in the nature of business income and is
not taxable in India in the absence of any PE in India.
However, the tax authorities hold a divergent view and
contend that the subscription revenues are liable to
tax as royalties. The issue is pending adjudication at
appellate levels.
07. DIT v TV Today Network Limited (ITA 600/2012)(Delhi HC)
08. Set Satellite (Singapore) Pte. Ltd v DDIT(IT) 173 Taxman 475 (Bombay HC)
Services rendered by non-resident for

production of programmes for purpose of
broadcasting and telecasting to be treated as
business income
This is a welcome ruling which provides persuasive value

to the position adopted by the taxpayers that fees paid for
production of programmes for the purpose of telecasting,
being specifically characterised as work for the purpose
of Section 194C, should not be treated as FTS in terms
of Section 194J of the IT Act. A similar view has been
taken by the Delhi High Court in the case of Prasar Bharti
(Broadcasting Corporation of India).
Service tax on distribution and advertisement

sale rights acquired from overseas
broadcasting company
In the case of M/s ESPN Software India (P) Ltd10, the
Delhi Tribunal has held that acquisition of channel
distribution and ad-sale rights does not amount to
import of broadcasting services and hence, not liable
to service tax under reverse charge mechanism.
ESPN India was engaged in distribution/ subdistribution of various channels owned by foreign
broadcaster, in India through Cable TV network
and DTH platform. Further, ESPN also purchased
advertising time inventory on these channels and sold
it to third parties in India. On such activities, ESPN was
already paying service tax under the taxable category
of broadcasting service.
09. Endemol India Private Limited [2013] 40 taxmann.com 340 (AAR New Delhi)
10. M/s ESPN Software India (P) Ltd Vs CST, New Delhi (AIT-2013-189-CESTAT)
under Section 194H of the IT Act. However, the

industry is of the view that the discount is not in
the nature of commission and hence, Section 194H
is not attracted thereon. This view is supported by
the decision of the Supreme Court in the case of
Ahmedabad Stamp Vendors Association11. In that
case, stamp vendors bought stamp papers from
State Government at a discounted price. The tax
authorities claimed that the vendors were agents of
the State Government and the discount was nothing
but commission or brokerage, liable to withholding
tax under Section 194H. The Supreme Court held that
tax need not be withheld on the discount given to
vendors since it is not in the nature of commission or
brokerage. The DTH industry is of the view that the
ratio of this decision should equally apply to discount
given to distributors for sale of STBs /RCVs.
The Service tax authorities contended that ESPN was

also the recipient of broadcasting services from the
foreign broadcasters and hence, was liable to pay
service tax on the import of broadcasting services.
Negating the contention of the tax authorities, the
Delhi Tribunal observed that:
the transaction would not be liable to service

tax under Broadcasting Services under reverse
charge mechanism since ESPN India did not
receive telecast signals from the foreign entity as
the signals were received directly by MSO/ DTH
providers, etc.
the definition of broadcasting is to be read as

a whole and cannot be interpreted to include
that the appellant is a service recipient as well
as a service provider under the definition of
broadcasting.
It could benefit the industry if the Government issues

a suitable clarification that discount on sale of STBs/
RCVs is not in the nature of commission/brokerage
and not subject to withholding tax, so as to avoid
unnecessary litigation across the DTH sector.

The aforementioned judicial pronouncement is expected
to put to rest the other litigations on the same matter that
are being pursued by the Service Tax authorities against
the broadcasters in India.
Dual levy of tax on DTH service

The DTH industry is subject to variety of taxes on
various transactions, such as VAT on sale of STBs,
Service Tax and Entertainment Tax on subscription
revenues, etc. Customers are charged STB installation
charges and activation charges, on which service tax is
being levied.
The period involved in the above mentioned case was

prior to the introduction of the negative list regime. With
the introduction of the negative list regime, effective 1
July 2012, the taxable service categories have been done
away with. Foreign broadcasters without a presence
in India will now be liable to take registration in India
and discharge the service tax liability on subscription
revenue, advertisement revenue, etc. earned for
the services provided in India. The Indian agents of
the foreign broadcasters will be liable to discharge
service tax on service fee recovered from the foreign
broadcasters. Such service fees recovered by the agent
will be available as credit to the broadcasters, subject to
the conditions prescribed under the CENVAT Credit Rules,
2004.
Providing DTH services is the predominant objective

of DTH operators. Therefore, to build their subscriber
base, a majority of DTH players have shifted from the
model of selling STBs to the customers to providing
the STBs on entrustment basis, without charging any
consideration for the same. While there should be no
VAT applicable on such a transaction effected without
consideration, the VAT authorities of various States are
seeking to levy VAT on such transactions on the ground
that the installation and activation charges recovered
from the customers include the price of STBs. This
leads to double taxation of the same consideration (i.e.
VAT and Service Tax), thereby causing significant strain
to the industry.
Since installation and activation charges are service
revenues and service tax is being levied thereon, they
could be kept outside the purview of VAT.
DTH Industry
Key Tax issues
Withholding tax on discount on sale of Set Top

Boxes (STBs) / Recharge Coupon Vouchers
(RCVs)
From an income tax perspective, an issue arises vis-vis applicability of withholding tax on the amount
of discount given to distributors on the sale of STBs/
RCVs. The tax authorities are of the view that discount
on sale of STBs/RCVs is in the nature of commission,
subject to withholding tax at the rate of 10 per cent
11. CIT v Ahmedabad Stamp Vendors Association 25 taxmann.com 201 (Supreme Court)
Taxability of RCVs
Taxability of RCV for subscriptions has long been a
matter of dispute, particularly around whether this
qualifies as a good or a service.
The industry has been adopting a position that the
RCVs are in the nature of actionable claims and cannot
qualify as goods. Moreover, the intrinsic value of
RCVs is insignificant and they are used in the course
of provision of services. However, the VAT authorities
of various States have been seeking to levy tax (VAT
as well as Entry tax) on such RCVs on their face value,
treating them as goods.
264
265
the income in India, the taxpayer should have obtained

order under Section 195 of the IT Act for withholding
of taxes prior to making the remittance. In the absence
of withholding tax from such payments, the expenses
were disallowed by the tax authorities.
While there are judicial precedents which have held that

RCVs do not qualify as goods, it could benefit the industry
if the respective State Governments issue a clarification
and makes suitable amendments to VAT schedules, so as
to avoid litigation across India on this issue.
The Tribunal, relying on the OECD Commentary,

observed that a search engine, which has its presence
only through its website, cannot be held as a PE
unless its web servers are also located in the same
jurisdiction. Accordingly, since the search engines of
Yahoo and Google were outside India, they did not
constitute a PE in India.
Music Industry
Key Tax issues
Deductibility of cost of music rights

Deductibility of acquisition cost of license in music
rights has been a controversial issue. The issue is
whether such costs are entitled to depreciation (at the
rate of 25 per cent on written down value basis); or
are in the nature of revenue expenditure, deductible
in the first year or are to be amortised over the period
of license. The Mumbai Tribunal in the case of Tips
Cassettes & Record12 and the Calcutta Tribunal in the
case of Gramophone Company of India13 have held
that the payment for acquiring music rights is in the
nature of acquiring raw material and hence, deductible
as revenue expenditure. Given that it is a timing issue,
it would help the cause of the industry and avoid
litigation if the Government can issue a Circular /
clarification confirming this position.
The tax authorities pointed out that the Government

of India (GOI) has expressed its reservations on the
views of OECD. The reservations provide that website
may constitute a PE in certain circumstances. In this
regard, the Tribunal held that the GOIs reservations
are relevant only in respect of tax treaties entered into
by India after expressing such reservations. It further
observed that though the GOI has stated that website
may constitute a PE in certain circumstances, but till
date it has not specified what those circumstances
are.
Relying on the decisions in the case of Pinstorm
Technologies Pvt. Ltd.15 and Yahoo India Pvt Ltd16,
the Tribunal held that payment made for online
advertisement is not in the nature of royalty.
On the FTS front, the Tribunal held that there is
no human touch involved in the whole process of
advertising service provided by Google and Yahoo
and therefore, the payment cannot be taxed as FTS.
Accordingly, it was held that the payment made was
not liable for deduction of tax at source and therefore,
cannot be disallowed under the provisions of the IT
Act.
Digital Media/ Out of Home

(OOH) Industry
Service tax implication on sale of space or

time slots for advertisements
Selling of space or time slots for advertisements, other
than advertisements broadcast on radio or television,
forms part of the negative list of service tax regime.
Accordingly, selling of space or time slots on digital
media i.e. internet or selling of hoarding space should
not be liable to service tax, irrespective of who the
service provider or service recipient is and the mode of
consideration.

Online advertising on internet search engines has
become an important advertising and marketing tool
for the present day business. The above ruling has reaffirmed the position of non-withholding of tax in respect
of payments for online advertising on the portal of a
foreign company, adopted by various Tribunals earlier.
Withholding tax on payment of

advertisements on a portal
From an income tax perspective, an issue arises as to
whether payments made by Indian entities to a foreign
company for uploading and display of the banner
advertisement on its portal would be liable to tax in
India. Recently, in the case of Right Florists Private
Limited, the taxpayer14 had made payments in respect
of online advertising to Google Ireland Limited (Google)
and Overture Services Inc USA (Yahoo) without
withholding any tax from these payments.
The taxpayer took a stand that since Google and Yahoo
did not have any PE in India and also did not carry out
any operations in India, the payment was not taxable in
India. The tax authorities rejected the contention of the
taxpayer and held that irrespective of the taxability of
12. Tips cassettes & Record Co. v ACIT 82 ITD 641 (Mumbai Tribunal)
13. Gramophone Co. of India Limited v DCIT 48 ITD 145 (Calcutta Tribunal)
14. ITO v. Right Florists Pvt Ltd [2013] 32 taxmann.com 99 (Kolkata - Trib.)
Radio Industry
Key Tax issues
Deductibility of License fees

Radio broadcasters are required to pay license fees
(one time entry fee and recurring annual fees) to the
Government as per license terms. The issue that has
arisen is whether such fees are in the nature of
15. Pinstorm Technologies Pvt Ltd v. ITO [2012] 54 SOT 78 (Mum)

16. Yahoo India Pvt Ltd v. DCIT [2011] 140 TTJ 195 (Mum)
revenue expenditure to be claimed as deduction in the

year in which they are incurred or are in the nature of
capital expenditure, entitled to depreciation. Since the
annual license fee is payable for each year of operation,
it could be allowed as revenue expenditure. Further, the
one time entry fee could be allowable as a deduction
over the period of license. However, another view
is that the payment for the one time entry fee could
be treated towards license acquisition, specifically
covered as an intangible asset, eligible for depreciation
at the rate of 25 per cent. This has resulted in dispute
between the taxpayer and the tax authorities. The
Government could issue a Circular or clarification on
this aspect so as to avoid protracted litigation.
Clarity on the issues faced by the sector coupled with

certain tax incentives could contribute towards the
development of sports in the country.
Other Issues impacting the

M&E Industry
Up to 31 March 2013, royalty and FTS payable to nonresident were liable to withholding tax at 10 per cent20
on gross basis.
Service tax on sale of advertisements

From a service tax perspective, selling space or time
slots for advertisements other than advertisements
broadcast on radio or television forms a part of the
negative list. Thus, the sale of space or timeslots on
radio is liable to service tax. The industry is of the view
that inspite of the fact that radio is a cost free and easy
medium of mass communication, the aforesaid benefit
of exclusion from the levy of service tax is not granted
to radio industry, which is an unfair treatment. The
Government may consider extending the benefit to the
radio industry as well.
Sports
The importance of sports in the country has increased
over a period of time with various international sports
events being conducted in India (such as Cricket, Golf,
Formula One, etc.). Taxation of sports associations,
sportspersons and foreign teams participating in such
sporting events (for example, taxability of broadcasting
revenue earned by the sports associations, taxability
of participation fee received by sportspersons,
advertisement and sponsorship income earned by the
participating teams, attribution of income in India, etc) is a
vexed issue.
However, Finance Act 2013 enhanced this basic

withholding tax rate from 10 per cent to 25 per cent
on gross basis. This will have significant impact on
payments made for acquisition of content, transponder
hire charges, etc. and therefore, will enhance the
cost of doing business, especially where the tax
is to be borne by the Indian party (in which case
the withholding rate can go upto 33 per cent20).
However, there is a silver lining here given that a lower
withholding tax rate under tax treaties can be applied,
provided the non-resident obtains an Indian Permanent
Account Number (PAN) and Tax Residency Certificate
(TRC).
Clear roadmap for implementation of Goods

And Service Tax (GST)
There seems to be no clarity as to the exact date of
implementation of GST. With the impending general
elections, the fate of its implementation is highly
uncertain. The introduction of GST could go a long way
in reducing the tax costs of the industry, as credit for
taxes paid on purchase of goods would be available
for set off against taxes payable on services and vice
versa.
Further, the problem of dual taxation (i.e. levy of
service tax as well as VAT on certain transactions) is
expected to be sorted out with the implementation of
GST. Therefore, the industry expects the Government
to release definitive timelines and steps for the
implementation of GST at the earliest.
Whether payment for acquiring right to telecast live

event is in the nature of royalty subject to tax in India is
a subject matter of controversy between the taxpayers
and the tax authorities. The Mumbai Tribunal in the case of
Neo Sports Broadcast Pvt. Ltd.17 has held that since there
is no copyright in live events, the payment for broadcast
of live matches is not in the nature of royalty and
accordingly, not taxable in India. However, the proposed
Direct Taxes Code specifically considers payment for live
feed as royalty.
As regards taxability of foreign sports bodies, the Calcutta
High Court in the case of PILCOM18 has held that any
amount including the guaranteed amount paid to any non
resident sports association in relation to any match played
in India, were liable to withholding tax in India.
Withholding tax rate on royalty and fees for

technical services enhanced by Finance Act
2013
Also, the industry expects that other applicable indirect

taxes such as entertainment taxes will be subsumed
into GST. If the levy of entertainment tax is kept out
of GST, it could be particularly unjustifiable in States
such as Maharashtra, where the rate of entertainment
tax being levied on films is relatively high. Therefore,
entertainment tax should also form part of the GST.
Value Added Tax and Service tax on Copyright

The Union Budget 2012-13, had exempted the
licensing of copyright in cinematographic films from
service tax. However, effective 1 April 2013 the benefit
of the said service tax exemption has been restricted
As regards taxability of foreign teams, in the case

of INDCOM19, the Calcutta High Court has held that
amounts paid to foreign team for participation in match in
India as prize money were taxable in India.
17.
18.
19.
20.
DIT v. Neo Sports Broadcast (P) Ltd. [2011] 133 ITD 468 (Mum)
PILCOM v. Commissioner of Income Tax [2011] 198 Taxman 555 (Cal.)
INDCOM v. Commissioner of income Tax(TDS) [2011] 11 taxmann.com 109 (Cal.)
Plus surcharge and education cess
266
267
to licensing of copyright in cinematographic film for

exhibition in a cinema hall / theaters. Accordingly,
licensing of copyright in cinematographic film (for
other than theatrical exhibition) is liable to service tax.
Separately, the Government of various States have
made copyright liable to VAT, treating the same as
intangible goods.
Therefore, the dual levy of service tax and VAT on
the same transaction / consideration pertaining to
copyright in cinematographic films continues, which
needs to be addressed by the Government.
authorities disclosing details of such transactions in a

prescribed format.
Key Transfer Pricing issues
Comparability for unique transactions

The Indian TP regulations provide that the comparability
of an international transaction with an uncontrolled
transaction should be judged with reference to:
The specific characteristics of the property

transferred or services provided in the transaction
Mandatory Permanent Account Number
The Finance Act (No. 2) of 2009 mandated a higher

withholding tax rate of 20 per cent in case of payees
(i.e. recipients of income) not having a PAN, by
introducing Section 206AA in the IT Act. This provision
also impacts payment made to non residents.
Functions performed, taking into account assets

employed or to be employed and risks assumed, by
the respective parties to the transactions
With the changed dynamics of the industry, the

involvement of non-residents in the industry has
increased to a great extent. While non-resident
technicians assist in film production, a lot of content is
also procured by broadcasters from foreign parties.
The contractual terms (whether or not such terms

are formal / in writing) of the transactions which lay
down explicitly or implicitly how responsibilities,
risks and benefits are to be divided between the
respective parties to the transactions
Conditions prevailing in the markets in which the

respective parties to the transactions operate,
including the geographical location and size of the
markets, laws and Government orders in force,
costs of labour and overall economic development
and level of competition and whether the markets
are wholesale or retail.
Most of the above contracts with non-residents are

net of tax contracts i.e. taxes are borne by the payer.
In case of one-off payments, the non-residents cannot
be expected to apply for Indian PAN at the time of
receiving the payments from residents (i.e. when
tax deduction has to be made). This has given rise to
a situation, where even if the appropriate rate of tax
deduction at source (in terms of the provisions of the
IT Act or the applicable tax treaty) is much lower, taxes
are withheld at a higher rate (in absence of PAN). This
has led to a significant increase in the overall costs of
doing business for the Indian entities.
Considering the above situation, the Government could
consider measures to address this.
In view of the above mentioned parameters, if the

nature of international transactions entered into
between parties in the M&E Industry are analysed,
it can be seen that they are unique and peculiar and
are not comparable to those undertaken in any other
industry, mainly on account of the nature of assets
or intangibles being traded between the parties. The
following examples will help better understand the
scenario.
An Indian channel company purchases film rights

from a related party situated abroad. However, the
price paid may vary significantly for various films
and would depend on factors such as whether a
film is being telecast on television for the first time,
the timing of telecast, etc.
Similarly, in the case of an Indian company which

owns a channel being telecast in a foreign country
and which grants advertisement rights on a
revenue split basis to related parties abroad, the
proportion of split may vary significantly depending
upon various economic and commercial factors.
Transfer Pricing
With the increase in cross-border transactions across
the globe, the scrutiny by the Transfer Pricing (TP)
authorities of such transactions undertaken between
related parties has also increased manifold. Hence, it is
imperative for companies to have a robust TP policy in
place to support the pricing of cross-border transactions
between related parties. The Indian TP regulations require
a taxpayer to undertake international transactions
with associated enterprises on an arms length basis.
Further, the regulations mandate the use of one of the
six prescribed methods as the most appropriate method
for the determination of the arms length price. From
a compliance perspective, the regulations prescribe
maintenance of mandatory documentation by taxpayers
on an annual basis in relation to their international
transactions and also cast a compliance obligation on the
taxpayers, which involves filing of annual transfer pricing
certificate (known as Accountants Report) with the tax
Given the unique nature of transactions undertaken,

the above poses peculiar challenges from a
benchmarking perspective. Firstly, it is usually difficult
to gather information from the public domain on similar
independent transactions undertaken in this industry.
Secondly, even if some data is available on certain
similar transactions undertaken between unrelated
parties, they can seldom be used for benchmarking
the related party transactions because of material
differences between the two transactions being
compared. For example, in case theatrical rights
of a forthcoming movie are proposed to be sold by a

media house in different overseas jurisdictions, some
of which may have their own subsidiaries located
overseas, various commercial factors play an important
role in arriving at an appropriate arms length benchmark
for the transaction, such as market perception of the
theatrical rights being sold and value ascribed to movies
involving differing star casts in different locations, timing
of transaction, credentials of the transacting parties,
advertisement and publicity involved, etc. On account
of such factors, the determination of the arms length
price of a transaction with related parties poses serious
difficulties despite data being available for similar
transactions undertaken with unrelated parties. This is
because it is difficult to quantify the impact of all these
different factors in numeric terms so as to facilitate
necessary adjustments that may be required to be made
to uncontrolled transactions to render them comparable
to controlled transactions.
reports, standard rate cards, price quotations and

commercial and economic business models, etc. to
demonstrate arms length intent. The application of the
Other method could be particularly helpful in cases
where application of the other five specific methods is
not possible due to difficulties in obtaining comparable
data due to uniqueness of transactions such as
intangible transfers, etc.
With a view to address the increasing TP litigation

in India; the Indian Government has introduced APA
provisions with effect from 1 July 2012. The arms
length price as determined under the APA provisions
will be valid for a maximum period of 5 consecutive
years unless there is a change in the provisions or the
facts having bearing on the international transaction.
With the introduction of detailed rules providing a
framework for the APA regime in India in August 2012,
the APA program is seen as one of the more positive
developments, which should assist taxpayers to obtain
certainty on their crucial transfer pricing matters, if they
so desire.
Difficulty in application of prescribed methods

The Indian TP regulations have prescribed five methods
under law (as prescribed by the CBDT) for the purpose
of determination of the arms length price, viz., (1)
Comparable Uncontrolled Price Method (2) Resale
Price Method (3) Cost Plus Method (4) Profit Split
Method and (5) Transactional Net Margin Method.
Further the law enables CBDT to prescribe any other
method. On 23 May 2012, the CBDT has notified the
other method vide a Notification and Rule 10AB has
now been inserted in the Income-tax Rules, 1962 (the
Rules). Rule 10AB describes the other method as any
method which takes into account the price which has
been charged or paid, or would have been charged or
paid, for the same or similar uncontrolled transaction,
with or between non-associated enterprises, under
similar circumstances, considering all the relevant
facts. This Rule has come into force from financial year
2011-2012 onwards.
Given the uniqueness of international transactions
entered into between related parties in the M&E
space, it is often felt that the benchmarking analysis
may not always be possible within the purview of
the five methods prescribed under law. For example,
there may be issues relating to valuation of licenses
being transferred between parties or forecasting
expected revenues and cash flows to justify the
payments being made today for acquisition of certain
media / content rights. In such cases, one would often
need the support of valuation reports to justify the
transaction value. Since the valuation approach did
not technically find any mention under the law, prior
to the introduction of the other method taxpayers
were saddled with the responsibility of adopting
one of the five prescribed methods which might not
have necessarily been the most ideal approach for
benchmarking and often posed practical challenges
in developing a strong audit defense to support the
transaction value.
With the introduction of the Other Method, taxpayers
may have a little more flexibility to use tender
documents, third party bids, proposals, valuation
Advance Pricing Agreements (APAs)
In the first year of APAs, over 150 formal pre-filing APA

applications were received as on 31 March 2013 out of
which 146 formal APA applications were filed. Several
rounds of discussions are already in process and the
experience has been satisfactory so far. International
TP experts have welcomed the collaborative approach
of the Indian APA team. It is being hoped that soon a
few final APA agreements could be announced.
In relation to the M&E industry, the option of APAs
can be explored in case of complex and high value
transactions or where the company is already
undergoing TP audit scrutiny and hence, could be
selected for audits again or where the company
needs financial certainty with regard to future
tax implications. APAs could reduce the need for
documentation and the uncertainty associated with
audit and appeals over APA term and facilitate TP
planning. Double taxation can be avoided in case of
Bilateral/ Multilateral APAs.
Specified Domestic Transactions

Vide Finance Act 2012, the applicability of TP
regulations has been extended to transactions
between domestic related parties where certain
tax holidays are claimed and in respect of payments
(expenditure) to domestic related parties. The above
shall apply in cases where the aggregate amount of
all such domestic transactions exceeds INR50 million
(approximately USD0.8 million) in a year.
Safe Harbour Rules (SHRs) announced

To reduce increasing number of transfer pricing audits
and prolonged disputes, the Government notified the
SHRs in September 2013. The Indian Safe Harbour
mechanism provides for circumstances in which
certain categories of taxpayers can avail an option
whereby the transfer prices declared by them would
268
269
automatically get accepted by Indian tax authorities,

subject to fulfillment of certain conditions. The
mechanism covers specific kinds of intra-group
services, manufacture of automobile components
and financial transactions in the nature of loans and
guarantees. Taxpayers availing the option would be
able to safeguard their transfer prices against potential
litigation for a maximum period of 5 years.
Regulatory Updates
The Telecom Regulatory Authority of India (TRAI) has
issued recommendation to the Government on 22 August
2013 for revision of Foreign Direct Investment (FDI) limits
in certain media segments. The recommendation of TRAI
on the FDI limits is as under:
Sr. No.
Segment
Existing limits/ Approval

Route
Recommended Limits /Approval

Route
Teleport/DTH/HITS/IPTV/Mobile TV
74%
100%
Cable TV Networks
Up to 49% - Automatic route
Up to 49% - Automatic route
Beyond 49% - FIPB route
Cable Networks (Multi System Operators

(MSOs) operating at National or State or
District level and undertaking upgradation
of networks towards digitalisation and
addressability)
2
Cable Networks (Other MSOs not

undertaking upgradation of networks
towards digitisation with addressability
and Local Cable Operators (LCOs))
49%
Downlinking of TV Channels
100%
100%
Uplinking of non News and Current affairs

TV Channels
Through FIPB Route
Through FIPB Route*
Uplinking of News and Current Affairs TV

Channels
26%
49%
Through FIPB Route
Through FIPB Route*
Beyond 49% - FIPB route*
Automatic Route
FM Radio
* Foreign Investment Promotion Board (FIPB) approval process to be streamlined and made time-bound
Conclusion
The Indian M&E sector is rapidly emerging on the world
map, thus marking its global presence. It is high time
for the Government to provide fillip to the industry by
addressing the various issues discussed in this chapter.
This can not only provide a boost to the M&E sector
but can also attract foreign investment in India, thus
contributing to the overall growth of the Indian economy.
270
15
Skills in the M&E sector
Redefining roles
Introduction
Media and entertainment in India has evolved from just
one channel, few films and a handful of newspapers to
786 channels, over 1000 films per year and thousands
of publications. The consumption of media has grown
steadily over the years with increasing reach, previously
underexposed demographics accessing media and the
proliferation of different platforms. As a result, skilled and
trained manpower is a crying need in the sector.
Demand drivers
Some of the growth drivers in the sector are:
Digitisation of television and film

The ongoing roll-out of digital addressable systems (DAS)
across the country is expected to lead to replacement of
analogue transmission(which could carry merely 80-100
channels) by digital platforms like DTH and digital cable
with much higher capacity (500+ channels).1
Digitisation can enable the broadcasters to invest in new
genres, as well as increase the amount of high-definition
content. India with 786 channels2 and with around 200
new channels awaiting approval from the Ministry of
Information and Broadcasting,3 the need for skilled
manpower across job - roles such as content production,
channel operations and sales and marketing among
others in the television sector is set to rise.
Over 95 per cent of all the film exhibition screens in India
are digital which could mean wider distribution of content.
This, along with the level of multiplexes increasing, will
likely drive diversification of film genres and content. Also,
expansion of investments in 3D and VFX rich content can
also drive the demand for a skilled workforce1.
Phase III Radio Licenses

The auction of Phase-Ill radio licenses will extend FM
radio services to about 227 new cities, in addition to
the existing 86 cities, with a total of 839 new FM radio
channels in 294 cities. Phase-III policy will cover all cities
with a population of one lakh and above with private FM
radio channels. New radio stations would mean demand
for people across all job-roles such as content production,
sales and marketing, audio engineering, and broadcast
operations among others.4
Increasing demand for regional content

With hundreds of regional language news and general
entertainment channels and with around 87 percent of
films being made in regional languages in 20135, there
is huge demand for regional language content. This has
potentially created the need for quality content in regional
languages across all mediums - print, TV broadcasters,
radio or film companies. With the growth of regional
markets, production budgets have risen significantly
as has the sophistication and quality of productions.1
This can automatically lead to a demand for production
personnel with focus on the regional markets.
01.
02.
03.
04.

IndianTelevision.com, 06 February, 2014
Business Standard, 15 January, 2014
The Asian Age, 26 December 2013
Growth of new media

The rise of social or alternative media has coincided
with the broadband penetration, proliferation of smart
phones and adoption of mobile internet in India.1 In
2013, India had 15.5 million broadband subscribers6
and 130 million mobile internet connections users7.
Industry players are keen to capitalize on this demand
for new media and communications and create content
accordingly. A workforce that can not only understand
and create innovative content but is also hands-on with
the technology and programming skills is the need of
the hour. Given the pace of technological change and
challenges, there is a requirement of people skilled in
understanding new domains e.g. Big data analytics,
digitisation of content, cyber due diligence and IPR.
Challenges1
The demand drivers clearly point toward a requirement
for substantial manpower both in terms of quantity and
quality. For a sector that is still evolving, the challenge
to get a skilled workforce commensurate with growth is
immense. Some of the common challenges across subsegments are:
Industry players are yet to fully recognize the
importance of training, skill development or education
in media. The students trained in a media course often
have to compete with general stream graduates for a
job, as the industry continues to hire general stream
graduate students at the entry level who are expected
to learn on the job
Perception about media as a vocation-especially
on the creative side-is often not favourable. Other
challenges that accentuate the issue is the lack of job
security driven by company size and the widespread
use of freelancers, sometimes unattractive salaries
as compared to other industries and absence of clear
career path for a student
These make it usually difficult to attract or retain
students or manpower across many sub-segments,
especially the creative profiles like script-writing, filmmaking, production, acting, journalism and animation
The demand for manpower in the sector may have led
to the opening of a lot of media schools but many of
them lack quality, teach an outdated curriculum and are
mostly ill-equipped to handle demands of the industry
to train and skill manpower.1 Students graduating from
these institutions may find it difficult to be employed;
hence, it tends to diminish the value of media
education as a whole.
There is clearly a gap in the number of quality
institutions, given Indias size and the concentration of
education institutions in tier-I cities
05. Central Board of Film Certification

06. TRAI Performance indicator reports 2013 and KPMG in India Analysis
07. IAMAI Mobile Internet in India report, 2013 and KPMG in India Analysis
272
273
A lot of production houses in television, films,

animation and news, in both print and broadcast, have
in-house training schools but they lead to creation of
a captive talent pool and do not benefit the industry at
large
Industry discussions have also brought forth the
need to have better quality faculty members in media
schools, many of them may be good practitioners but
not necessarily good teachers
Attrition is high since most job roles reach saturation
level soon, due to lack of a career path. It also has to do
with the image of media as a glamourous profession
but not all the job roles are such and soon the
candidate loses interest in the sector.
Education for film professionals has not grown

at the same rate as the film industry itself. We
need to provide international standard training
to professionals holding technical jobs in the
industry.
-Nina Lath Gupta
Managing Director,
National Film Development Corporation
Film
India is one of the countries that produces the most
number of films in the world (around 1426 in 2013).
With the numbers of films being made steadily rising
every year (961 in 2006 to 1426 in 2013),8 the need for
skilled manpower has become pronounced. Traditionally,
film education in India has been largely limited to few
established government institutions such as Film and
Television Institute of India (FTII), Pune, Satyajit Ray Film
and Television Institute (SRFTI), Kolkata and Jamia Millia
Islamia, New Delhi.
FTII receives around 5,000 applications from various parts
of the country for admission to various PG diploma and
certificate courses at FTII. The total number of seats in the
11 courses is 132, with each course having 12 seats.9
With the number of films being made and the popularity
of film courses growing, the capacity of government
institutions is a constraint; hence, private players have
stepped in the last few years to fill the gap. Several
private film schools such as Whistling Woods, Balajis ICE,
Shristi School of Art, Design and Technology, Annapurna
International School of Film and Media among others have
been established.10 In addition to these, there are several
smaller institutions that have emerged in an unorganised
manner. These schools, many unaccredited, offer short
team courses but the quality of the curriculum and the
low quality of teachers often result in graduates who
find themselves irrelevant or poorly equipped to obtain
employment in the industry.
08.
09.
10.
11.
UFO Moviez India Limited and Central Board of Film Certification

The Indian Express, 6 February 2014
Shiksha.com, 08 March 2013
Curriculums are also catering to emerging job roles i.e.

Annapurna International School of Film and Media has a
specialised media-based MBA course and its structure
consists of finance, accounts, marketing, strategy and
entrepreneurship all from media industrys perspective.
These courses feed into the demand for media managers
in the industry.10
Since they are not allowed to award degrees, most of
these schools have affiliations with foreign media schools.
Established foreign film schools such The New York Film
Academy (NYFA), are also looking to tap into the demand
for quality film schools. It has launched a full-function
state-of-the-art campus in at Greater Noida in 2013.
They offer certificate courses and workshops in the India
campus, but offer degree courses only in their parent
branch in Los Angeles.11
Universities are also shifting focus from generalized
mass communication courses to film specific courses.
For example, Andhra University introduced a four-week
certificate course in Digital filmmaking and film acting
last year, in association with Apoorva Creations.12
In spite of the growing number of film schools, the
challenge to get trained manpower will likely remain:10
There is a perception among students that training in
the film industry is not required and most film industry
aspirants do not possess formal training as they expect
to learn via the apprentice route. This could have
created a dearth of trained creative people like actors,
script writers, screen play writers and directors
Trade unions too have a part to play. Much of the
technical pool in the film industry is affiliated to trade
unions that do not have any standardised criterion
for enrollment, hence the quality of manpower often
does not meet the desired standards. Their wages
and employment are mostly governed by these trade
unions.
Television
In a country where the entire nation watched just one
channel, Doordarshan, till a little over two decades ago,
the growth of television medium and number of channels
has been exemplary. The country has 786 channels, out
of which 389 are news and current affairs channels, while
the remaining 397 are non-news and current affairs ones.
Most film schools also cater to the television since many
of the skills overlap with film making.13 The industry may
have yet to mature in order to offer a great number of
specialty TV courses.
The recent years have seen a demand for regional content
leading to launch of various media schools in tier II and III
cities. Take for example, an acting school called Actors
Studio recently opened in Orissa. The acting programme
at Actors Studio which focusses on both TV and films is
designed to integrate theory, analysis and practice in the
classroom. The programme uses a variety of techniques
ranging from behaviour-based methods to technologyoriented exercises designed to enhance performance for
camera.14
12. Deccan Chronicle, 04 June 2013
13. Television.com, 06 February 2014
14. The Telegraph, 31 January 2014
The challenges plaguing the television industry are:15

Lack of fresh talent pool. Creative profiles like actors
and writers are mostly in short supply. This can impact
not only costs but quality and differentiation as well,
since most of the available talent pool is used across a
range of productions
Few media schools imparting courses in creative
writing or ideation leading to paucity of content
creation in the television industry, where number of
channels have grown exponentially
Most courses in media marketing and sales are not
very popular with media schools and the industry often
has to look to other sectors to hire manpower for these
job roles. FMCG tends to be a key poaching ground for
the media industry
Budget constraints which tend to limit creativity and
often hamper the possibility of exploring innovative
concepts or formats.
Industry is looking positive and on the upstream,

both industry and students have realised that
the way to go in this industry is through proper
education and training. Education is invaluable
for this industry. India has historically not been
known for media and entertainment education,
but now things have started to change.
Academia and industry together are taking
strong steps towards the goal of having a welltrained and well-educated workforce.
- Chaitanya Chinchlikar
Vice President - Business Development,
Whistling Woods International
Print
With the advent of digital medium, print medium is on
the decline in most parts of the world. In India however,
the morning newspaper still holds an edge over the click
of a mouse. India produced 3,73,840 newspapers and
journals in 2012.16 Institutions like Indian Institution of
Mass Communication, Jamia Millia Islamias course in
journalism and Asian College of Journalism have been
popular with students.
Journalism is also being offered by universities at the
undergraduate level, for example, Delhi Universitys
journalism course is sought after and even smaller
universities such as Uttarakhand Open University have
started offering post graduate degrees in journalism with
courses such as Masters in Journalism and New Media
in Hindi. More recently, The Law School, Banaras Hindu
University (BHU), plans to introduce a one-year diploma
course in mass communication and media laws from the
coming 2014-15 academic session.17
15.
16.
17.
18.

Registrar of Newspapers for India; Ministry of Information and Broadcasting
The Times of India, 14 February, 2014
Animation Boss, 8 January, 2014
However, with limited number of seats catering to only

select few, the media houses realised the talent crunch
and started with their own media schools such as Pioneer
Media School, Times School of Journalism and recently,
the Dainik Bhaskar group has opened a media school.15
The need for trained journalists remains and some of the
challenges faced are:15
The print medium often faces challenges from within
the media sector in terms of attracting and retaining
talent. Lack of clear and slow career path and low
salaries often steer the talent pool, be it the creative
ones or the managers and sales personnel, towards its
more perceived to be glamorous counterparts such as
films and television
Students generally lack command over languages, be
it English or regional languages, which is crucial for a
journalists job, and therefore often fail to secure a job.
Animation & Visual Effects

One of the issues that Indias animation sector has
struggled with has been the clear lack of deeply trained
talent. A key driver of cost structures as well as a magnet
for business, animation is in need to fill the acute skill gap.
The demand for animation production is expected to
continue to gradually increase as the sector gains scale.
International television programming requires stateof-the-art work and India delivers that at significantly
low costs. The cost of animation production in India
is one fourth of North America and very competitive
on the labour front when compared to countries such
as Malaysia, Korea and the Philippines, which are
traditionally the other outsourcing hubs. Countries such
as the U.S., Canada, Australia, the U.K., France, Italy
and Spain outsource work to India. Mumbai, Chennai,
Bengaluru, Hyderabad and Trivandrum are the countrys
major animation hubs.18
The demand from the domestic market too especially in
television has been rising. A number of animation and
VFX companies in the country are also creating skilled
manpower for the animation market through various
training programmes. Many production houses have
alliances with media schools so that they can get formally
trained students, for e.g. Reliance MediaWorks has an
alliance with Annapurna International School of Film and
Media. Numerous individual training programmes are
available from leading advertising and media institutes
in the country such as Shristi School of Art, Design and
Technology and National Institute of Design. These
institutes offer various programmes in animation and
digital production.15
But despite this, the animation sector faces challenges
which include:15
Animation is one of the more specialised mediums and
needs a combination of aesthetic sense and technical
knowhow. Many institutions though, often ignore
these criteria and train students in software operations
focusing only on technical knowledge without any
training in design, arts or conceptualisation
274
275
Technology is dynamic and a lot of the software the

students train in become outdated by the time they
graduate, often creating the need for the employers to
retrain them
The ecosystem for animation is still mostly nascent
and it is largely restricted to programming for children
Compared to other sections of the media industry,
growth in animation has been challenging, often
constraining the industrys capacity to offer
competitive compensation and career growth.
In terms of overall vocational skill-sets

development, the macro environment within the
media industry isnt as evolved and conducive
as mature industries like IT, manufacturing,
engineering or pharmaceutical industries. This is
also one of the reasons why the industry cannot
really be the first career option for a majority
of youngsters. Further creation of institutional
training facilities, a dedicated vocational
approach at imbibing skill-sets and generating
commensurate enough job opportunities will
actually address this gap and industrialize the
industry as a whole. This in effect will lead to
a matured M&E industry, similar to its other
industry counterparts.
- Venkatesh Rodham
CEO,
Music
Over the ages, music in India has been taught in the
gharana style primarily in Hindustani, and Carnatic in the
guru-shishya tradition.19 But music education in India
has undergone a lot of changes with professional music
schools imparting training in vocals and instruments.
Music has always been an integral part of Indian
cinema and prominence of music in films has remained
undiminished, so there is a demand for talented and
trained musicians and artistes. Over the last few years,
a lot of new age music schools have opened in India to
cater to the rising demand for good musicians.
For example, music director A R Rahmans KM Music
Conservatory offers part-time and full-time courses
in Hindustani and Western classical music and music
technology. It offers courses in collaborative partnership
with Middlesex University, UK. The Foundation
Certificate in Music is a one-year course designed to
acquaint students with fundamental musical skills and
prepare them for the study of music at degree level. The
curriculum contains units in academic skills, music history
and analysis, music theory, performance,composition and
audio technology. It became a full-fledged college offering
degrees and diplomas in 2013, called the KM College of
Music and Technology.19
20. Media and Entertainment Sector Skill Council website
Some of the other music schools are Swarnabhoomi

Academy of Music which has collaboration with
McNally Smith College of Music, USA and boasts of
70 faculty from 25 countries. The Shankar Mahdevan
Online music academy provides courses online and
has students from across 43 countries enrolled in 140
courses. FremantleMedia, 19 Entertainment (a division
of Core Media Group) and Karm Yog Media & Arts
Education Network have partnered to launch the Indian
Idol Academy. True School of Music has international
faculty from Manhattan School of Music, New York City
for its professional programme, international DJs, sound
engineering and music production courses authored by
The Academy of Contemporary Music, UK.19
Despite this, the music industry faces a lot of challenges
when it comes to skilled manpower:
While there are several students at the school and
college level who pursue music as a hobby, the lack
of clarity and structure in the industry, on music as a
career, inhibits many students from pursuing music
full time. Musicians see lucrative careers largely in
film music and advertising jingles. Unlike the West,
where the vast majority of musicians form careers
while performing live, in India, musicians do not have
many options since the live events space is only just
emerging
A formal structure and a theoretical base for the study
of music coupled with degrees and formal certification
is the need of the hour to build a strong foundation of
trained music talent in the country.
The industry should work together with media

education schools in structuring a curriculum
that meets the needs of the industry so that the
people studying these courses also get placed
as per their specialization.
- Chris Higgins
President,
Annapurna International School
of Film and Media
Government initiative20
As a response to the growing need for skilled manpower
in the industry, a public-private initiative in the shape of
the Media and Entertainment Sector Skill Council (MESC)
was formed three years ago. Set up under the National
Skills Development Mission, Government of India, under
the aegis of National Skills Development Corporation
(NSDC), and promoted by FICCI, the council seeks to
identify the quantitative as well as qualitative skill needs
across various sub-segments of the sector and address
them by generating adequately skilled workforce which is
industry ready and employable.
The key objectives of MESC include:

To focus on building the Occupational standards,
evaluation criterion and accreditation systems for
providing multiple and varied technical skills in the
media sector, including employability skills with regular
and direct inputs from industry
To create a sustainable and technologically advanced
platform for collection, storage and exchange of
industry data, workforce data, welfare data and career
related data across the whole industry segment called
the Labour market information system (LMIS)
To build high quality trainer and learner communities
while providing effective real-time connects between
the job providers and jobseekers
To actively engage with the Government and Industry
for support to realise existing synergies and build new
ones.
The council has signed a consortium agreement with
forums such as Film and Television Producers Guild,
Animation Gaming & VFX Forum, Indian Outdoor
Advertisers Association, Film Federation of India, Indian
Broadcasting Foundation and Association of Radio
Operators of India.
As a first step, to fulfill its objectives toward skilling people
in the sector, the council has approved four National
Occupational Standards (NOS) for the Animation sector.
NOS describe functions; standards of performance of an
individual when carrying out a function in the workplace;
it also defines the level of knowledge and understanding
they need to meet that standard consistently. Essentially,
NOS are benchmarks of good practice.
MESC is also part of the STAR Scheme (launched to
incentivise skill development by providing monetary
rewards to candidates for getting trained) with approved
job roles in Animation. MESC has been provided
with a target number of 10,000 certifications for the
scheme. MESC is affiliating various training partners and
assessment agencies for the scheme.
Recommendations22
Discussions with industry players and media schools
have highlighted the steps needed to underline the
importance of education in media and the role that all
the stakeholders i.e., the government, industry players,
universities, parents need to play. Some of these are
given below:
It is imperative that media and entertainment is
integrated as a part of the school curriculum. While the
Central Board of Secondary Education offers a course
at class 12 as a vocational subject, other education
boards in the country need to introduce it22
Institutions need to pay close attention to teacher
recruitment, training and create regularly updated
curriculum in consultation with industry
A formal regime of accreditation across sub-sectors of
media and entertainment needs to be instituted
There needs to be a regulatory body to monitor
standards of media education in terms of the student21. Industry discussions conducted by KPMG in India
22. Hindustan Times, 02 April 2012
teacher ratio, practical - theory ratio, job roles and

curriculum.
There is probably a lack of coordination among
government bodies. Greater coordination among
various bodies and agencies can help give coherence
to policies being formulated for training and skilling in
the sector
Technology is likely becoming a huge differentiator in
the sector. Through technology, a convergence has
taken place on a global scale which has helped skill
sets, skill demand and talent pools be looked upon
from a global and not local perspective. Application
of international benchmarks is required even while
forming committees for policy decisions. Leading
global examples should preferably be followed for
developing skills
Demand is seen to be shifting from low-end skill sets
to mid and higher skill set levels. There needs to be
continuous up skilling for quality of output. This can
also ensure a growth path to the media professionals
Industry needs to recognize the value of training and
place premium of skilled workforce to retain and attract
manpower
Apart from language skills, quantitative skills need to
be developed for understanding issues, complexities
and social realities, for sub-segments like journalism
and new media
Government and the industry need to support training
institutions financially, so that they can develop
infrastructure, for example purchase the latest
equipments to train students
Trade unions and associations in films and television
industry need to provide incentives and a structure
to develop skills through vocational courses. This
can be done internally or through a partnership with
educational institutions and companies
There may also be a lack of recognised degree
courses. Almost all media courses in India are diploma
courses. Government needs to recognise the courses
as degree courses since both the student and the
employers value a degree course over diplomas
Media schools are primarily concentrated in tier I
cities, whereas the growth of regional media demands
that tier II and III cities also have media schools. A
campaign at the state level to highlight this opportunity
to private players or government departments could be
undertaken by the industry.
The growth in the M&E sector hasnt been

replicated in the M&E education. There are
a few programmes offered at different levels
however an ecosystem has to be developed
where it is considered as a preferred career
choice. M&E education should ideally
begin at the school level to provide a holistic
understanding of the sector.
- Ravi Gupta
Dean,
Whistling Woods International
276
16
Analytics
Profiting from insight
Introduction
Changing landscape
With the phenomenal overall growth of digitisation in

the last five years, todays media and entertainment
(M&E) industry faces unique challenges like fluctuating
consumer preferences often leading to shorter product
lifecycles, multiple channels for users to access the
same information, different versions of the same content
across media and constant change in measurement
of viewership and effectiveness among many others.
To address these challenges, M&E organisations are
revamping their way of supporting strategic initiatives and
placing increasing stress on data driven insights. In order
to find a profitable solutions to strategic issues, M&E
organisations are working intensively on the huge amount
of information that they have collected from various
sources to interact with their customers and reduce cost
by fixing leakages in the system.
M&E organisations are adopting innovative ways of

accomplishing their objectives of making the most
out of the available data (customer demographic data,
content viewership data, mobile content usage data,
advertisement response data) by investing in (in-house/
outsourced) capabilities to support their strategic
decisions. Core analytics solutions provides the basis for
effective planning and execution with clear objectives,
activities, deliverables and benefits that help improve
performance1.
Change drivers
Multiscreen access to same content
Given its ability to be a strategic enabler in addressing

a wide range of complex issues, analytics solutions
are increasingly finding usage in the M&E industry. The
transformative effect of data analytics is helping this
fragmented industry in monitoring performance and
maximising the return on investment. M&E organisations
are able to use analytics as a key differentiator to deliver
customised offerings to its customers and reduce the
cost of operations by converting a major part of its capital
expenditure to operational expenditure.
Given the wide application of analytics, analytics driven
solutions are broadly classified below in the increasing
order of complexity.
Increase in user generated content
Data and analytics solution framework

New tools to measure viewership effectiveness
Information/Data
Management
Analytics Point
Solutions
Big Data Solutions
New business models

Source: KPMG in India Data and Analytics Research
Reporting/
Dashboarding
01. KPMG in India Data and Analytics Research
Analytics Led
Transformations
277
278
As the data assets grow in number, there is a clear

need for the organisation to revamp its information
management system to bring data driven decisions into
practice. Organisations that have found a way to identify
the right insights at the right time often have a better
control over the business.
Focus Areas
Though the entire industry is mostly fragmented, there
are common areas of concern across the value chain in
this rapidly evolving market. Identified focus areas: sales
and marketing function of M&E organisation:
Identified Focus Areas: Sales and Marketing Function of M&E Organization

Targeted Content
Creation
Media Content
Monetisation
Multichannel
Distribution Management
Customer Acquisition
Customer Engagement
Media planning
Subscription
management
Sales
channel mix
Customer and
service usage
User content
analysis
Acquire and
manage content
Rights management/
license sale
Channel performance
monitoring
Social media
analysis
Customer loyalty
management
New content
production
Ads and
promotions
Channel level
incentives
Cross platform
advertising
Recover churned
customers
Solution themes
The core analytics solutions come under the following
categories2:
Customer Analytics
In this dynamic M&E environment, consumers are
often demanding more personalised services and
communication for the subscribed services. Using
predictive analytics techniques, companies can decode
their customer behavior patterns and assess the
opportunities to prioritise their marketing interactions.
Analytics can also be used to the extent of differentiating
profitable customers from loss making customers
through customer lifetime value and help in building a
healthy portfolio of customers. In addition to the digital
data, other non-digital data helps to improve the accuracy
to predict, target and deliver customised content to the
customers.
Distribution Channel Analytics

Creating and managing content for multiple media
formats, across multiple distribution channels can be a
complex endeavor. Analytics for distribution systems
can discover insights on forecasting appropriate
content, content production, cross channel distribution
and business support by providing integrated data
management and business insights. These insights can
then be utilised in the optimum allocation of channel
resources to help obtain maximum ROI profitably.
01. KPMG in India Data and Analytics Research
Online Analytics
With billions of users accessing the content globally,
internet is a major channel to track companys
performance across a variety of parameters. Tracking
customer perceptions online, allows companies to help
understand customer sentiments, thereby providing a
deeper understanding about their products. Based on
the insights derived on the product performance, M&E
organisations can tweak the product characteristics to
suit the target customers. As a follow through, they can
also track individual channel-wise performance through
attribution modelling to understand the contribution of
different online channels to their revenue.
M&E companies are able to unlock

business insights on:
Which is my most profitable brand?
What are the buying patterns of my customers?
Which one of my distribution channels is most profitable for me?
What is the revenue trend of my business processes in the next

quarter?
What will be the impact of a new distribution channel to my

revenue?
Which are my most and least profitable customer segments?
How can I predict trends in churn in my viewership?
Which is the most profitable time slot for my new program in the
scheduling grid?
How can I effectively analyse test campaign results?
Campaign Analytics
With growing costs and increasing number of ways to
reach out to customers it is important that the M&E
companies invest only in the most optimised marketing
campaigns to prevent unnecessary leakage of resources.
Campaign Analytics comes to the rescue of marketers to
study the effectiveness of different marketing activities
and take appropriate steps to maximise the return on
marketing investments. This gives an opportunity for the
media companies to select optimal investment amongst
a combination of distribution channels to give the desired
result. It also helps them in identifying the right kind
of pricing combinations for the proposed promotional
campaigns and get an idea of the ROI for different
combinations of inputs values.
Content Analytics
Intellectual Property rights management is key for
M&E organisations to better monetise content and
expand to new markets. Effective use of property rights
requires companies to have complete information on
the intellectual property that they can sell in a particular
region through a particular channel. Through analytics
M&E organistaions can track metrics like license
performance, contract period and derive insights on
managing existing contracts, cross selling and up selling
opportunities. This information can provide insights in
executing better licensing deals and also helps ensure
compliance.
279
280
Illustrative Viewership
Analytics architecture to
improve video profitability
To improve the video portfolio, M&E companies use
viewership analytics to identify the right combination of
products, acquire more customers, engage with existing
customers profitably and reduce the cost through better
negotiation on the content fees.
Viewership analytics architecture

Presentation Layer
Analytics
Layer
Reporting
Segmentation
Campaign Management
Viewership Forecasting
Proprietary Viewership Data Model

Channel
clustering
Programing bundle
enhancer
Next best
activity engine
Retention decision
engine
Viewership Data Mart
Data Integration
Layer
ETL
Data
staging
Data
cleansing
Data
aggregation
Data Sources
Viewership data
OTT servers
Customer profile
Third party feeds
Analytics can generate value for any media company
Generate
Revenue
Objectives
Description
Programming ROI
Understand the ROI, revenue and churn

impact on revenue channels
Bundle
Enhancement
Regulate bundles to improve overall video

portfolio profitability
Cross Sell/ UP
Sell
Increase (1) RGU/PSUs per customer and/

or (2) ARPU
Retention
Retain customers on the service and/or

higher margin packages
Acquisition
Acquire new customers to the business
Carriage Fees
Reduction
Improve ability to negotiate better content

fees
Price Bundling
Video Portfolio
Enhancement
Volume
Reduce Cost
Programming
Costs
Illustrative Applications of
Media Analytics
More than ever, M&E organisations are beginning to
use improved analytical capabilities to identify new
revenue streams and predict customers response to
price, package and promotions. M&E organisations are
leveraging data analytics solutions to arrive at optimal
pricing for their products, manage inventory allocation,
increase TVTs and effectively engage their customers to
increase the profits. Some of the business applications
and their resultant benefits achieved by a few M&E
organisations are presented below:
Rate Card Development
Proposal Optimisation
With too many factors to be considered in the
development of a proposal to suit advertiser
requirements, this new M&E broadcasting organisation
struggled to determine the inventory mix and price that
maximised the chances of converting a proposal amongst
the advertisers5. With less information in coming up
with effective pricing combinations for each product and
its spot value, this organisation involved subject matter
experts to design customised proposals with higher rate
of conversions profitably. In addition to optimising the
placement of commercials, it also:
Utilised analytics optimisation techniques to meet or
exceed the advertisers requirements while allocating

inventory in the most efficient manner, reserving
higher value spots for future demand to come
With a huge inventory in the form of day-of-the-week and

part-of-the-day spread across a time period of one year, a
leading Indian M&E advertising organisation was finding
it difficult to manage thousands of potential rates for
each and every advertising spot and its SKUs3. Through
a structured analytical approach they were able to come
up with spot-wise level and SKU-wise level pricing to
maximise the revenue.
Incorporated price sensitivity, competitive pricing
Optimised rate cards, incorporated price sensitivity
Cross-Channel Platform Optimisation
and a granular demand forecast
Simulated the channel-wise potential revenues based
on forecast adjustments and competitive pressures

through what-if analysis dashboards
Predicted future impacts on the rate card by integrating
the forecasted customer demand for next year.
Local Market Optimisation

To maximise the customer viewership across particular
regions this media organisation utilised analytics to
understand local market characteristics. Through a micromarket segmentation approach, the organisation was able
to segment its customers with varying viewership needs
national, regional, local characteristics 4. Based on the
results obtained, the M&E organisation was able to build
their expertise in inventory management more suitable
for the local audience. This media company:
Utilised historical inventory data and forecasts to
optimise inventory allocation between national and

local business
Created dashboards to automatically allocate inventory
between national and local markets
Developed business processes to incorporate market
information and forecast of demand-to-come to

determine optimal pricing for each individual proposal
Developed comprehensive sales processes and
change management plans to ensure sales force

adoption of proposal recommendations
A leading M&E organisation uses different channels

to provide content to cater to their customer needs6.
They utilised sophisticated tools within each channel
(television, web, mobile, etc.) to optimise the
performance of that particular channel in silos. Because
of this they were not able to efficiently sell an optimal
bundle of spots across channels. Using cross-platform
optimisation, the organisation:
Unified and rationalised platform (TV, web, mobile)
pricing and inventory to create a one-stop shop for

proposals and quotes
Developed cross-functional coordination between
inventory management, sales and traffic to enable

cross-platform decision making
Developed a one-stop monitoring tool to monitor the real

time performance of their marketing campaigns across
channels.
Financial Management Scorecard

In order to gain quantitative assessment of financial
Management strengths5 and weaknesses in comparison
to the competition, this leading M&E broadcasting
organisation utilised business intelligence
optimisation tools in National and Local sales decisions

processes
03. http://www.mobilecommercedaily.com
04. http://www.dvinfo.net/article/trip_reports/hpa-tech-retreat-2014-day-3.html
05. http://www.plunkettresearch.com/entertainment-media-publishing-market-research/industry-andbusiness-data
06. http://www.sys-con.com/node/2985414
281
282
and reporting platforms to arrive at a comprehensive

scorecard for performance evaluation. Through the
financial management scorecard, the organisation was
able to benchmark the core business competencies of
organisation, systems, analytical tools, processes and
practices, and:
Created a comprehensive view of the current state of
revenue management through advanced visualisation

dashboards
Gained insights into competitive structure, techniques
and strategies in the form of quantitative and

qualitative metrics
Incorporated recommendations for elimination of gaps
and weaknesses into a transformational plan
Media and Entertainment

analytics way ahead
for improved content
monetisation and customer
interest
With the advent of internet, the M&E environment is
evolving at a rapid pace. To keep themselves abreast of
this change, M&E organizations will have to adopt new
approaches to their existing processes to deliver top class
service to their customers. Some of the key ideas that will
help them to change profitably are discussed below:
Content Management
Case in Point
The Internet has forced M&E content creators to

reengineer content-related processes.
Movie Industry Analytics
New content types require newer content
The movie industry is undergoing a transformation as

both budgets and box office continue to climb. It is a
high risk game for investors with huge amount of money
riding on a movie. Analytics has come to the rescue of a
lot of these investors in terms of being able to predict the
revenue, based on the factors influencing the ROI.
Analytics allows production houses to go beyond
simple focus groups or established financial modeling
to determine how audiences might respond to a given
film. From the past data they identify predict the boxoffice collection through advanced analytical modeling
tools. Advanced analytical tools are being used to
forecast revenue collection of a movie based on certain
parameters. Some of these parameters include cast,
genre, release date, release locations and other critical
characteristics associated with the movie. These
parameters are then compared with historical data to
predict box-office revenue collections.
High budget movies are also accompanied by huge
marketing budgets. As a recent development, digital
marketing has come up as focus area in recent times.
Social media allows movie trailers and videos to go viral
within limited time. Analytics is being used to create a tab
on the number of times the movie is being mentioned on
social networking sites like twitter. Also, the information
about demographic of users mentioning the movie is
being collected to design the marketing communications.
management capabilities.
Designing the next best product can be done through
implementing analytics solutions on past data.
Search and browse requirements need metadata
tagging and SEO.
Many publishers (e.g. newspapers) dont charge for
public content. This is expected to pave way for newer

ways of content monetisation.
Educational publishers are often affected by inclusive
governmental regulations.
The concept of helping the reader achieve his specific
objective is expected to be the key to retain customer

interest.
Distribution Channel
The emerging digital world requires new methods of
distributing content.
Identifying the optimum distribution channel mix is
expected to reduce a lot of operational expenditure for

the media and entertainment organisation.
With the advent of kindle and smart phones, any
content on any device at any time becomes the

expectation.
Providing an active role for the readers in defining
their products could decide the success rate of the

distribution channel.
Social media offerings could help the media and
entertainment organisations to track customer

preferences at a channel level.
Usage Monitoring
Customer Management
Rights and Royalty Issues go up as content becomes

easily accessible.
Data analytics can emphasise product and service

definition and management processes, apart from sales
and marketing.
Data on content usage will likely help media and
entertainment organisations to develop targeted

products and services.
Data analytics allows newspapers/magazines to more
effectively target advertising at consumers.
Content access and rights/royalty issues can be better
Consumer privacy issues could emerge because of
Influx of user-generated content, or content from other
Higher education publishing sees opportunities to
addressed through big data analytical capabilities.

publishers, in custom publishing products requires
analytical abilities to analyse content usage.
behavioral monitoring.
extend services beyond courseware to admissions,

alumni, student placement services.
Boundaries between Customer Relationship
Management (CRM), Enterprise Resource Planning

(ERP), Learning Management System (LMS) and data
analytics capabilities can continue to blur.
Competitive differentiation could demand
sophisticated data analysis and reporting tools.
New ideas and technologies that are shaping the Media and
Entertainment environment
Enterp
rise
Res
ou
rce
P
nin
Co
t
ten
yste
ent S
gem
a
n
Ma
l an
KPMG in India - Data and Analytics point of view
e Social Media Plat

form
Onlin
Broadcasting
ess
Busin
Intelligence
agency
ics
So
io
lut
ns
Customer R
e
l
a
tion
shi
p
Ma
na
lyt
nt
me
ge
Dat
aA
na
Upcoming ideas and technologies
283
284
285
Acknowledgement
Aarti Mirchandani
Neha Pevekar
Aditya Prasad
Nidhi Dandona
Amit Khanna
Niraj Prabhavalkar
Anindya Roychowdhury
Nitin Pandey
Anisha Gupta
Nkereuwem Ekpo-Ufot
Ashwini Singh
Pankit Shah
Darshini Parikh
Payal Thaker
Dilip Tuli
Pranav Desai
Divya Sangwan
Rahul Shah
Gaurav Gupta
Rajesh Patel
Gautham Madhavan
Remedios Dsilva
Hitesh Kapadia
Sakshi Sodhi
Hussain Rahat
Sandeep Yadav
Jaydeep Hingne
Shaji Khan
Jiten Ganatra
Shilpa Taneja
Jithesh Rajendran
Shreela Nair
Joseph Tegbe
Shveta Pednekar
Joyeeta Ghosh
Siddhanth Phutane
Jyotirmoy Mukherjee
Sidharth Gopalan
Karthik Viswanathan
Soumo Ganguly
Kaushal Dedhia
Subashini Rajagopalan
Madhavan Vilvarayanallur
Subramanyam Ganapathi
Maulik Mehta
Suchitra Laxman
Melvin Barboza
Tinuola Ipadeola
Mitul Shah
Varun Gulati
Narayanan Ramaswamy
Vidhi Gupta
Neelima Balachandran
Yash Shah
Neha Narain
Zeel Gala
from KPMG in India in preparing this publication.
We acknowledge the efforts put in by:
KPMG in India contacts
FICCI contact
Dinesh Kanabar
Leena Jaisani
Deputy CEO
Chairman Sales & Markets
E: dkanabar@kpmg.com
T: +91 22 3090 1661
Sr. Director and Head

FICCI Media & Entertainment Division
E: leena.jaisani@ficci.com
T: +91 22 2348 7505
Jehil Thakkar
FICCI
Head Media and Entertainment

E: jthakkar@kpmg.com
T: +91 22 3090 1670
Federation House
Tansen Marg
New Delhi - 110001
E: ficci@ficci.com
T: +91 11 2373 8760 / 70
F: +91 11 2332 0714 / 2372 1504
Raajeev B. Batra
Head Governance, Risk and Compliance
E: rbbatra@kpmg.com
T: +91 22 6134 9501
Aneesh Vijayakar
Partner Transaction Services
E: aneeshvijayakar@kpmg.com
T: +91 22 3090 2131
Rakesh Dharawat
Partner Tax
E: rdharawat@kpmg.com
T: +91 22 3090 2610
Nitin Atroley
Partner Sales & Markets
E: nitinatroley@kpmg.com
T: +91 124 307 4887
Varun Gupta
Director Strategy Services Group
E: varungupta1@kpmg.com
T: +91 22 3090 2132
Nidhi Maheshwari
Director Tax
E: nmaheshwari@kpmg.com
T: +91 124 307 4322
Nandita da Cunha
Associate Director Markets
E: ndacunha@kpmg.com
T: +91 22 3989 6000
kpmg.com/in
Scan this QR Code to visit the

KPMG-FICCI Frames 2014 microsite
Follow us:
Twitter: twitter.com/kpmgindia
YouTube: youtube.com/user/kpmgindia
LinkedIn: linkedin.com/company/kpmg-india
Facebook: facebook.com/kpmgindia
The information contained herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no
guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the
future. No one should act on such information without appropriate professional advice after a thorough examination
of the particular situation.
2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG
International.
Printed in India.

Frames 2014

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Frames 2014

Încărcat de

Drepturi de autor:

Formate disponibile

The stage is set

The stage is set

Getting to critical mass

Paused for growth

Next frontier for Indian

Waiting for the digital

Deal volume and

Taking centre stage

Media and Entertainment

The Media and Entertainment (M&E) industry in India

carry explicit messages to create social impact. Further,

Films: Short films on disadvantages of tobacco

Television: TV shows on social issues to raise

Radio: Content highlighting social initiatives aired on

awareness, such as Crime Patrol Dastak (Sony

radio such as Mirchi for Muzaffarnagar (Radio Mirchi),

Print: Friends of Hindustan (Print campaign by Hindi

Poo to the Loo on Facebook, Twitter and Youtube to

Industry size and projections

Animation and VFX

Source: KPMG in India analysis

01. KPMG in India analysis

In calendar year 2013, the Indian Media & Entertainment

The Indian M&E sector showed some resilience and

slowdown trend. The sector grew at a CAGR of 8.5 per

Films: The film industry recorded a double digit growth,

albeit slower than in 2012, with multiple movies scoring

Music: Streaming and download services continued

to see growth, with the growth in mobiles, in particular

Radio: The radio industry outperformed all other

implementation of the same in 2014, industry players

Animation / VFX: 2013 was an important year for the

to approximately 214 million by end of the year with

Round up of the key trends and themes for

Digitisation Taking the next step

Continued growth in Regional Media

political issues related to particular regions and stronger

India goes more mobile

Industry Discussions conducted by KPMG in India

This is leading to a rapid increase in internet based

The need for youth to stay socially connected

Necessity of regulatory support

Tata Sky Pressroom, May 2013

In 2013, the 12 minute cap on advertisements per hour

Growing contribution of live events in M&E

2013 has been a watershed year for the

2013 was also the year of the regulator, whether it

2013 saw a lot of action by the regulator on

The television industry in India is estimated at INR417

There is a big opportunity in the television media

Paid C&S penetration of TV households

TV households and C&S penetration of TV

C&S penetration of TV households

Source: KPMG in India analysis, Industry discussions conducted by KPMG in India

Snapshot of the TV industry value chain

implementation challenges in some Phase II cities such as

2013 was a landmark year where all the

Even as MSOs work to verify and consolidate billing for

The Phase I and Phase II experience

Most industry participants are in agreement that the

Despite the implementation and policy bottlenecks,

Expected to start from

Not started yet

Not started yet